June 13, 2009

 

CBOT Soy Review on Friday: Stumble on profit-taking, dollar strength

 

 

Soy futures on the Chicago Board of Trade stumbled Friday, backpedaling on end-of-week profit taking and bearish outside market pressure.

 

CBOT July soy settled 21 1/2 cents lower at US$12.45 1/2 and November soy finished 13 1/4 cents lower at US$10.76 1/2.

 

July soy meal settled US$5.30 lower at US$422.70 per short tonne. July soyoil finished 104 points lower at 37.16 cents per pound. In pit trades, speculative fund selling was estimated at 6,000 lots in soy and 1,000 lots in soymeal. Speculative funds were estimated net sellers of 2,000 lots in soyoil.

 

The market had produced some pretty good gains for the week, and traders took the opportunity to take some profits off the top heading into the weekend, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

For the week, July soy ended 20 cents higher.

 

The nearby July contract soared near the magical US$13 a bushel level Thursday, but without any follow-through buying overnight and strong gains in the U.S. dollar, the stage was set for mild corrective sales, Hannagan added.

 

A firmer dollar makes U.S. exports more expensive to world importers.

 

The unwinding of some bull spreads was featured as well, with profit-taking on the spreads a key influence on price direction, a CBOT floor broker said.

 

The July/November bull spread settled at US$1.68 1/2 a bushel, down from Thursday's settlement of US$1.77 1/4 cents.

 

Traders took the opportunity to trim some risk ahead of the weekend, as fear of slowing demand from China left traders a little uncomfortable holding new long positions established at nine-month highs, Hannagan said.

 

Nevertheless, tight old crop inventories and the uncertainty of new crop production remain underpinning features expected to limit declines in the near term, analysts added

 

The DTN Meteorlogix weather forecast calls for generally cool temperatures across the central U.S. during the next five days. This trend is unfavorable for crops due to a lack of growing-degree units. Crop progress is delayed by this unseasonable round of cool weather.

 

Showers will continue to cross the Midwest through the weekend into early next week. However, forecast maps for the next 10 days continue to indicate the formation of upper-atmosphere high pressure over the Midwest, leading to warmer conditions, which will be favorable for most central U.S. crops.

 

On tap for Monday, National Oilseed Processor Association is scheduled to release its May soy-crush report at 8:30 a.m. EDT (1230 GMT). Soy crush rates for May are expected to increase to about 137.2 million bushels from the previous report, while soyoil stocks are expected to decline to 2.69 billion pounds from 2.71 billion pounds in April.

 

 

SOY PRODUCTS

 

Soy-product futures retreated in unison with soy Friday. Soymeal stumbled on profit-taking pressure after carving impressive gains for the week, with strength in the dollar adding pressure to attracting flat price and spread profit taking, analysts said.

 

Soyoil futures fell on technical weakness, spillover from soy and pressure from declines in crude-oil futures. Ample nearby supplies and a lack of fresh supportive news aided the declines, traders added.

 

July oil share slipped to 30.57%, while the July soy crush ended at 93 1/4 cents.