June 4, 2009

 

CBOT Soy Review on Wednesday: Tumble; consolidates on speculative profit taking

 

 

Soybean futures prices at the Chicago Board of Trade tumbled Wednesday, as the market consolidated prior gains on speculative profit taking.

 

CBOT July soybeans settled 27 cents lower at US$11.82 and November soybeans finished 35 1/2 cents lower at US$10.47.

 

July soy meal settled US$8.00 lower at US$379.50 per short tonne. July soyoil finished 125 points lower at 39.25 cents per pound. In pit trades, speculative fund selling was estimated at 5,000 lots in soybeans, and 2,000 lots each in soymeal and soyoil.

 

The absence of fresh positive fundamental news in conjunction with bearish technical and outside market influences opened the door for traders to cover some long positions, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D.

 

An over US$2.00 a barrel drop in crude oil futures, a firmer U.S. dollar, more talk of China cancelling or rolling prior purchases and the inability of futures to hold near-term chart support produced a bearish price scenario, Hoops said.

 

Trade consolidation was a featured attraction, as overbought market conditions encouraged an overdue price correction, particularly with prices at historically high levels.

 

New crop futures were the downside leader on the day, succumbing to pressure from trade ideas that lingering planting delays in the eastern Midwest and spring wheat seeding problems in northern areas will lead to increased soybean acres. Historically high soybean prices are an incentive for farmers to plant additional soy acres when faced with lower yield potential associated with late planted corn and spring wheat, a CBOT floor analyst said.

 

Despite a lower overall theme, bull spreads widened, with tight old crop inventories continued to limit downside risks in nearby contracts.

 

The July/November bull spread settled at US$1.35 a bushel, up from Tuesday's settlement of US$1.26 1/2 cents.

 

The DTN Meteorlogix weather forecast calls for periods of rain with total amounts of up to two or more inches in the eastern Midwest during the next three to five days. This continued wet weather pattern is unfavorable for crop activity in the region due to extensive delays in soybean planting, along with hindering early development of crops which were planted in less-than-ideal soil conditions.

 

On tap for Friday, the U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate soybean sales for the week ended May 28 in a range of 200,000 to 500,000 metric tonnes. Soymeal export sales are seen between 75,000 and 250,000 tonnes, while soyoil sales are pegged between 5,000 and 15,000 tonnes.

 

 

SOY PRODUCTS

 

Soy product futures tumbled in unison with soybeans Wednesday. Soyoil futures were influenced by an over 3% drop in crude oil futures prices, while soymeal stumbled on a consolidative correction from a two month rally and strength in the U.S. dollar, analysts said.

 

July oil share ended at 33.97%. The July soybean crush ended at 84 3/4 cents.