June 23, 2009

 

CBOT Soy Review on Monday: Tumble on weather, weak outsides, technical pressure

 

 

Chicago Board of Trade soy futures tumbled Monday, extending Friday's retreat on weak outside markets, technical pressure and improved Midwest crop weather.

 

CBOT July soys settled 27 1/2 cents lower at US$11.51 1/2 and November soys finished 25 cents lower at US$9.81. In pit trades, speculative-fund selling was estimated at 5,000 lots in soys, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

July soymeal settled US$13.00 lower at US$377.00 per short tonne. July soyoil finished 60 points lower at 35.93 cents per pound.

 

The market lacked fresh fundamental support to underpin futures, with broad-based commodity selling and technical weakness dropping prices to one-month lows.

 

"The market is experiencing an overdue technical blowout of long positions following a three-month rally," said John Kleist, broker/analyst with Allendale Inc. in McHenry, Ill.

 

Downward technical selling momentum was featured, with declines accelerating once pre-placed sell orders were triggered after active contracts slipped below major moving-average support for the first time since late March, Kleist said.

 

New crop futures were pressured by Midwest weather forecasts conducive to late final plantings and crop development. Outlooks for higher soy acreage forecasts, in the U.S. Department of Agriculture's June 30 acre and stocks reports, added underlying pressure as well. Otherwise, the bounce in the U.S. dollar and drop in crude oil and equities applied weakness to keep buyers on the sidelines, analysts said.

 

The DTN Meteorlogix weather forecast calls for above- to much-above-normal temperatures in the central U.S. this week. Heat-index values will rise to more than 100 degrees Fahrenheit. In general, however, this hot-weather trend will be beneficial for corn approaching its pre-pollination active stage of development.

 

Thunderstorms with up to two inches total rainfall will cross the northern Midwest this week. These periodic rains will benefit crops by offering some relief from heat and boosting soil-moisture supplies, Meteorlogix said.

 

The 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 90% and 94% complete, with crop conditions holding steady.

 

 

SOY PRODUCTS

 

Soy product futures stumbled in unison with soys. Soymeal slipped near one-month lows, continuing its corrective phase after rallying sharply during the past three months. Soyoil futures dropped with the rest of the soy complex but managed to gain product share on meal/oil spread unwinding, traders said. Nevertheless, price pressure was consistent, with sharp declines in crude oil lending pressure to the market, analysts said.

 

July oil share slipped to 32.39%, while the July soy crush ended at 73 1/4 cents.