July 3, 2009

 

CBOT Soy Review on Thursday: Stumbles on position evening, outside weakness

 

 

Chicago Board of Trade soy futures stumbled Thursday under pressure from pre-holiday weekend position evening and broad-based weakness in commodity and financial markets.

 

CBOT July soys settled 15 1/2 cents lower at US$12.43, and November soys finished 9 1/2 cents lower at US$10.06. In pit trades, speculative fund-selling was estimated at 4,000 lots in soys, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

July soymeal settled US$7.00 lower at US$411.20 per short tonne, and December soymeal ended US$1.00 lower at US$314.70. December soyoil finished 68 points lower at 36.02 cents per pound.

 

Light-trade positioning ahead of the weekend, weakness from outside markets and forecasts for good crop-development weather next week in the Midwest served as catalysts to pin prices in negative territory, said Joe Victor, analyst with Allendale Inc.

 

However, a strong export base limited downside pressure, as the fear of continued strong export demand drawing down already-thin U.S. inventories kept a floor beneath prices, Victor said.

 

The tightening supply outlook is keeping support in the market, with record planted acreage not seen providing a comfortable cushion of new crop stocks. Futures backpedaled, as bearish economic signals from financial markets attracted speculative sales following Wednesday's sharp gains, traders said.

 

CBOT markets will be closed Friday in observance of the Independence Day holiday. Trade will reopen Sunday evening with the overnight electronic session.

 

The U.S. Department of Agriculture reported total weekly soy-export sales were a net 443,600 metric tonnes for the week ended June 25. Sales for 2008-09 were a net 193,500 metric tonnes. China bought 68,600 tonnes of old crop beans, including 58,000 switched from unknown destinations. Analysts had forecast sales between 100,000 and 425,000 metric tonnes.

 

The USDA also announced on Thursday private-export sales of soys at 660,000 metric tonnes for delivery to China in the 2009-10 marketing year.

 

The DTN Meteorlogix forecast calls for continued favorable temperatures for crop development through the holiday weekend and into the first full week of July in the Midwest. Periodic rain also is in store, which will further boost crop conditions. There appears to be some chance for hotter weather later in the 10-day period; however, this is expected to be only a brief occurrence.

 

Scattered showers are indicated for Delta crop areas during the weekend. This will help cool temperatures and ease stress on developing soys and cottonne, Meteorlogix said.

 

 

Soy Products

 

Soy product futures retreated in unison with soys. Soymeal slipped on pre-weekend positioning, bull spread unwinding and liquidation of nearby July contracts. Despite the setback, futures remained underpinned by tight supplies, and worries about the tight availability of stocks into the new crop year amid the uncertainty of soy supplies, analysts said.

 

Soyoil futures fell in unison with the rest of the complex, garnering pressure from a slide in crude-oil futures. However, strong weekly export sales were an underpinning feature limiting losses.

 

July oil share slipped to 29.93%, while the July soy crush ended at 48 1/2 cents.