June 16, 2009

 

CBOT Soy Review on Monday: Stumble on broad based market weakness

 

 

Chicago Board of Trade soy futures tumbled Monday, backpedaling on speculative selling associated with weakness across broader commodity and financial markets.

 

CBOT July soys settled 48 1/2 cents lower at US$11.972 and November soys finished 51 3/4 cents lower at US$10.24 3/4.

 

July soy meal settled US$17.40 lower at US$405.30 per short tonne. July soyoil finished 54 points lower at 36.62 cents per pound. In pit trades, speculative fund selling was estimated at 5,000 lots in soys and 1,000 lots in soymeal. Speculative funds were estimated net sellers of 2,000 lots in soyoil.

 

The rise in the U.S. dollar in conjunction with sharp declines in equities, crude oil and precious metals sent negative waves rippling through the market from the outset, analysts said.

 

A firmer U.S. dollar makes U.S. export prices for soys and soymeal more expensive and less attractive to world importers.

 

The broad based weakness sent some speculative longs running for cover, taking profits following a rally that produced 9-month highs last week, a CBOT floor analyst said.

 

Meanwhile, improved weather outlooks for developing crops provided fundamental pressure for new crop futures, enticing traders into trimming some risk premium from prices.

 

Despite the weakness seen across the board, the July/November bull spread widened as tight old-crop supplies remain a supportive force for nearby contracts.

 

The July/November bull spread settled at US$1.72 1/4 a bushel, up from Thursday's settlement of US$1.69 cents.

 

Higher-than-expected crushing data from National Oilseed Processors Association was a supportive feature for the nearby July contract. However, with futures sensitive to movements in financial markets, the rise in the dollar and drop in equities overshadowed the fundamental features, traders said.

 

NOPA said 142.2 million bushels of soys were crushed in May, up from 134.1 million in April, and above the average analyst estimate of 137.2 million. The range of pre-report estimates was 134.5 million to 139.5 million.

 

The DTN Meteorlogix weather forecast said the six- to ten-day outlook calls for upper atmosphere high pressure - or ridging - to set up over the Southern Plains. In general, this feature will bring warmer conditions to the Midwest, which will be favorable for crop development.

 

U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EDT Monday. Analysts surveyed by Dow Jones Newswires anticipate soy planting progress in range of 84% and 90% complete.

 

 

Soy products

 

Soy product futures prices fell in unison with soys. The strength of the U.S. dollar, weakness from soys, and profit taking on prior gains weighed on soymeal futures.

 

Soyoil futures stumbled, retreating on weakness throughout the soy complex and the bearish influence of falling crude oil futures, analysts said. However, soyoil was the strongest link in the complex, with the unwinding of meal/oil spreads and lower-than-expected stocks data limiting losses, analysts added.

 

July oil share slipped to 31.14%, while the July soy crush ended at 97 1/2 cents.