July 17, 2009

 

CBOT Soy Review on Thursday: Tumbles on China news, bearish crop weather

 

 

Chicago Board of Trade soy futures tumbled Thursday, backpedaling on speculative selling amid bearish crop weather and news of China releasing supplies out of their strategic reserves.

 

CBOT August soys ended 44 1/2 cents lower at US$9.76, and November soys finished 14 1/2 cents lower at US$8.90. 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.

 

December soymeal ended US$6.90 lower at US$268.50. December soyoil finished 32 points lower at 34.48 cents per pound.

 

The market was prone to continue loosing ground on a lack of fresh bullish news, while bearish news got all the limelight, said Bill Nelson, analyst with Doane Advisory Services in St. Louis.

 

The declines were systematic of bearishness in the market, with fears of China slowing their buying patterns after releasing stocks, ideal crop weather and technical pressure keeping buyers on the sidelines, Nelson said.

 

The unwinding of bull spreads weighed heavily on the front end of the market. The weakness came despite strong weekly export sales.

 

Old crop prices were seriously inflated, and the realization that new sales don't mean they will be shipped in the 2008-09 marketing year enticed traders into trimming risk exposure, said John Kleist, broker/analyst with Allendale Inc.

 

New crop futures stumbled on crop weather, but the November contract's inability to take out its July 8 swing lows provided support, as weather in July is not as critical to yields as August conditions are, Kleist said.

 

The DTN Meteorlogix forecast calls for timely rainfall in the Midwest and Delta through the end of the week. In the Midwest, rain of up to half an inch will continue to bring a mostly favorable weather pattern for developing soys. Hot temperatures, if any, will be brief and mainly confined to western and southern areas.

 

The Delta crop region is in line for cooler weather and increasing shower activity during the next few days. Rainfall totals may top two inches by the middle of next week, Meteorlogix said.

 

The China National Grain and Oils Information Center's will sell 500,000 metric tonnes of soys and 2 million tonnes of corn next week, it said Thursday.

 

The U.S. Department of Agriculture reported total weekly soy export sales were a net 684,700 metric tonnes for the week ended July 9. Sales for 2008-09 were a net 134,200 metric tonnes. China bought 111,200 tonnes of old crop beans, including 55,000 switched from unknown destinations. Sales for 2009-10 totaled 550,500 tonnes, with China the primary buyer of 525,000 tonnes.

 

 

Soy Products

 

Soy product futures ended lower, following the lead of soys. Soymeal futures stumbled, with the front end of the market tumbling on the unwinding of bull spreads. Lackluster weekly export sales, technical pressure and spillover from soys kept futures on the defensive, analysts said.

 

Soyoil futures ended lower, slipping on weakness from soys, but managed to gain product share on underlying export demand, stable crude oil futures and the unwinding of meal/oil spreads, traders said.

 

December oil share was 39.1%, while the November/December soy crush ended at 80 cents.