July 21, 2007

 

CBOT Soy Review on Friday: Declines after updated US weather forecasts

 

 

Chicago Board of Trade soybean futures settled lower Friday in two-sided activity as midday weather forecasts upended earlier advances, analysts said.

 

August soybeans declined 5 3/4 cents to US$8.50 1/4, and November soybeans ended 6 3/4 cents lower at US$8.75 1/4. August soymeal declined US$2.30 to US$225.20 per short tonne and August soyoil fell 14 points to 37.49 cents per pound.

 

"It's a dart board weather game and the dart fell on wet," said Dale Durchholz, an analyst with AgriVisor, referring to midday weather forecasts.

 

Soybeans began day session trading on a firm note on supportive overnight forecasts, but turned lower after midday weather forecasts increased the potential for rain next week in the U.S. Midwest with cooler temperatures also predicted.

 

An upper level system is forecast to move from the eastern corn belt into the central and western portions of the U.S. Midwest next week, said meteorological firm T-storm Weather in a note to clients. If this occurs, hot temperatures would not be a factor and seasonably cool weather and showers are possible, T-storm Weather said.

 

The market declined to its lows after the forecasts but trimmed their losses on position squaring ahead of the weekend.

 

Some participants remembered last weekend's bullish weather forecast that was not verified by Monday so some are nervous about keeping positions on, a commission house analyst said. Despite this week's weakness, the lower planted soybean acreage this season limits downside risk with any potential weather problem highlighting the need to produce a good crop, Durchholz said. Price direction on Monday depends on the weather this weekend and the overnight weather predictions on Sunday, a trader said.

 

On daily technical charts, November remained below its 10-day and 20-day moving averages.

 

In open auction trading, JP Morgan sold 700 November and Rand sold 500 November. Commodity fund selling was estimated at 2,000 contracts. In options trading, UBS sold 1,500 September US$8.80 calls and JP Morgan bought 2,400 August US$9.00 calls.

 

 

SOY PRODUCTS

 

Soymeal and soyoil futures finished lower Friday as weaker soybean values and position evening ahead of the weekend kept prices on the defensive after midday weather forecasts predicted weather favorable for crop development next week, an analyst said.

 

Some decided to go home without any positions on over the weekend after recent volatility, the analyst added. August oil share ended at 45.39% and the August crush ended at 58 1/4 cents.

 

In soymeal trades, Fimat bought 500 December and Rand sold 400 December as part of an oil-meal spread. In soyoil trades, Fimat bought 600 December.

 

On Friday afternoon, the Commodity Futures Trading Commission is scheduled to release the commitments of traders for the period ended July 17.

 

On Monday, the U.S. Department of Agriculture is scheduled to release the weekly crop conditions report for the week ending July 22.