June 11, 2008

 

CBOT Soy Review on Tuesday: Stumble; crude oil losses, dollar strength

 

 

Chicago Board of Trade soybean futures ended lower Tuesday, stumbling on speculative-led sales associated with weakness in crude oil futures and strength in the U.S. dollar.

 

July soybeans settled 5 1/2 cents lower at US$14.46 1/2 and November soybeans ended 6 cents lower at US$14.41. July soymeal settled US$7.50 higher at US$378.50 per short tonne. July soyoil finished 165 points lower at 62.65 cents per pound.

 

The strength of the U.S. dollar, crude oil futures falling and nailing soyoil futures, and prospects for increased soybean acres amid ideas delayed corn seedings and the corn replantings served as catalysts to weigh on prices, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The market initially garnered strength from supportive supply/demand and crop progress data, analysts said. A tighter U.S. balance sheet and worries late plantings and weather concerns will hamper yield potential were bullish factors, analysts added.

 

However, ideas the tighter balance sheet was previously factored into prices, the suspension of the Argentine farmers' strike and a lack of follow through fund buying took the edge off prices and attracted profit taking, a CBOT floor broker said.

 

Nevertheless, new crop futures continue to step out of the shadows of nearby contracts, with the uncertainties of 2008 yield potential remain underlying features to limit downside pressure, analysts added.

 

The DTN Meteorlogix Weather forecast said another batch of heavy rain is set to cover the northern Plains Tuesday night and move into the western Midwest Wednesday, with another 3-plus inches for Iowa. This rain will bring more flooding and further the comparisons to the great flood year of 1993.

 

The USDA estimated U.S. 2007-08 soybean ending stocks at 125 million bushels, down 20 million from the 145 million estimated in May. The USDA raised its export estimate by 20 million bushels accounting for the change. The USDA estimated U.S. 2008-09 soybean ending stocks at 175 million bushels, down from the May estimate of 185 million.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed with soymeal garnering product share on the unwinding of oil/meal spreads. Soymeal rallied on spreads, with underlying demand and technical strength buoying prices, analysts said.

 

Soyoil futures tumbled lower, pressured by the bearish influence of crude oil futures price movement and U.S. Department of Agriculture supply and demand projections reflecting higher old crop ending stock estimates, analysts added. USDA projected reduced soybean oil used for biodiesel production for both 2007-08 and 2008-09 as high soybean oil prices relative to other fats and oils have reduced the soybean oil share of total biodiesel production more quickly than expected.

 

July oil share ended at 45.28% and the July crush ended at 75 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 3,000 lots.