July 9, 2009

 

CBOT Soy Review on Wednesday: Extends slide on speculativec long liquidation

 

 

Chicago Board of Trade soy futures ended mostly lower Wednesday, with the liquidation of nearby contracts featured attractions, as traders continued to exit positions amid risk aversion.

 

CBOT July soys settled 49 1/2 cents lower at US$10.84 a bushel, and November soys finished 3 cents lower at US$8.92. In pit trades, speculative fund selling was estimated at 3,000 lots in soys, and 2,000 lots in soyoil.

 

July soymeal settled US$16.20 lower at US$364.80 per short tonne, and December soymeal ended US$0.30 higher at US$281.30. December soyoil finished 81 points lower at 32.91 cents per pound.

 

The combination of bearish economic signals from outside markets, favorable crop weather conditions and weak technical indicators served as catalysts to attract speculative selling.

 

The soy market is playing catch-up, with speculative funds taking all of 2009's profits out of corn and wheat previously, leaving the soy market as the last place to balance their books, said Tim Hannagan, analyst with Alaron in Chicago.

 

Since July 1, the most active November soy contract is down US$1.23 1/2 a bushel, or 14%. The nearby July contract is down US$1.74 1/2, or 16.1%.

 

Favorable Midwest weather for developing crops and the psychological fear of government regulation and potential restrictions on fund positions enticed large spec traders to trim length in the market as well, Hannagan said.

 

The DTN Meteorlogix forecast calls for rainfall of more than one inch over the western, central and northern Midwest during the next two days. This pattern, along with mild temperatures, will be favorable for soy plants moving into the prebloom stage. There will be some stress to crops in southern Illinois due to drier conditions and warmer temperatures, Meteorlogix said.

 

On tap for Thursday, the U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended July 2 in a range of 800,000 to 1.1 million metric tonnes. Soymeal export sales are seen between 75,000 and 250,000 tonnes, while soyoil sales are pegged between 5,000 and 55,000 tonnes.

 

 

Soy Products

 

Soy product futures ended mostly lower, keeping pace with the defensive theme in soys. Liquidation of nearby, old crop contracts in soymeal was a dominant factor in the market as large speculative traders balanced positions. The liquidation of July positions ahead of the contract expiration and position-evening ahead of Friday's supply and demand reports were featured, traders said.

 

Soyoil futures were on the defensive throughout, succumbing to speculative selling amid the bearish influence of sharp losses in crude oil futures and a firmer U.S. dollar, analysts said.

 

December oil share was 36.97%, while the November/December soy crush ended at 88 3/4 cents.