July 7, 2009

 

CBOT Soy Review on Monday: Tumble on outside markets, bearish weather

 

 

Soy futures on the Chicago Board of Trade tumbled Monday, back pedaling amid bearish economic conditions and favorable weather for developing crops.

 

CBOT July soys settled 43 cents lower at US$12.00 and November soys finished 43 cents lower at US$9.63. 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 soy meal settled US$10.00 lower at US$401.20 per short tonne, and December soymeal ended US$13.70 lower at US$301.00. December soyoil finished 92 points lower at 35.10 cents per pound.

 

"Bearish world economic conditions served as a spark to ignite speculative selling as well as keep buyers on the sidelines," a CBOT floor analyst said. A firmer U.S. dollar, sharply lower energy futures coupled with favorable weather conditions for developing central U.S. crops was enough of a negative influence to entice traders into trimming risk premium from the market.

 

A quiet news front left futures without any fresh directives to offset the defensive theme, as traders say new supportive inputs are needed to keep market bulls energized, analysts say. Nevertheless, tight old crop inventories and the uncertainty of new crop production remain underpinning features limiting downside pressure.

 

The DTN Meteorlogix forecast calls for near-ideal weather for Midwest soys during the coming week to 10 days. Temperatures will be generally seasonal, and rain during the holiday weekend in the central Midwest, and in store for northern areas this week, will provide beneficial crop moisture. Only a short period of hot temperatures is on tap for the region later this week; however, the heat then will decline, Meteorlogix forecast.

 

Meanwhile, crop areas of the Delta and Deep South have had showers and cooler conditions during the past 24 hours, which will help ease stress to soys, Meteorlogix reported. However, more rain is needed to end concerns, especially through southern areas where it has been quite hot during the past week, Meteorlogix said in the forecast.

 

The U.S. Department of Agriculture will release its weekly crop progress report at 4:00 p.m. EDT Monday. Analysts anticipate the percentage soy crops rated in good to excellent to remain unchanged from the previous week or improve by 2 percentage points.

 

 

Soy products

 

Soy product futures retreated in unison with soys. Soymeal futures tumbled, succumbing to the bearish influence of outside markets, with speculative buyers running for cover, traders said. Soyoil futures backpedaled as well, declining on sharp declines in crude oil. However, adjustments in the meal/oil spreads relation provided underpinning support to limit losses, analysts said.

 

December oil share was 36.83%, while the November/December soy crush ended at 85 1/4 cents.