April 28, 2009

 

CBOT Soy Review on Monday: Futures tumble; swine flu attracts speculative sales

 

 

Chicago Board of Trade soybean futures tumbled Monday, succumbing to speculative selling on fears of lost demand resulting from the outbreak of swine flu.

 

CBOT May soybeans ended 35 1/2 cents lower at US$10.04 3/4, July soybeans settled 37 cents lower at US$9.97 and November soybeans finished 28 3/4 cents lower at US$9.04 1/2.

 

July soy meal settled US$12.00 lower at US$306.30 per short tonne. July soyoil finished 81 points lower at 35.84 cents per pound.

 

The potential affect of swine flu on soy exports, amid the potential for reduced demand for hogs, raised concerns about a cut in feed demand, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Russia during the weekend banned pork imports from nearly a dozen U.S. states in reaction to the growing international health crisis. China also put on import bans on pork.

 

Speculative funds had ample profits on the books following a six-week uptrend, so the fear the swine flu news created opened the door for profit taking, Hannagan added.

 

However, some traders were encouraged by the market's ability to hold up fairly well in the face of the news and weakness from outside markets. Bullish Asian demand, a much smaller Argentina soy crop and worries of demand outstripping old crop stocks remained bullish features to limit downside risks.

 

The ability of the stock market to hold steady in the face of global fears associated with the swine-flu outbreak led to perceptions that futures may have seen the worst of the swine-flu reaction, said Jack Scoville, analyst with Price Futures Group.

 

Price action overnight and Tuesday will be critical to future direction, as traders watch for any expansion in the flu outbreak to an epidemic or pandemic, said Hannagan. If the swine-flu situation doesn't expand, plantings remain behind average and demand stays firm, futures will remain underpinned, Hannagan added.

 

In pit trades, speculative fund selling was estimated at 6,000 lots.

 

 

SOY PRODUCTS

 

Soy-product futures fell in step with declines in soybeans. Soymeal futures tumbled, as the threat of lost feed demand amid global fears of the spread of swine flu attracted speculative sellers, analysts said.

 

Soyoil futures traded lower as well, pressured by weakness in the rest of the complex and spillover pressure from crude-oil futures. However, soyoil managed to gain some product share on spreads and the threat lost feed demand weighed on meal, analysts said.

 

In pit trades, speculative fund selling was estimated at 2,000 lots in both soyoil and soymeal.

 

July oil share ended at 36.9%. The July soybean crush ended at 71 cents.