July 25, 2009
CBOT Soy Review on Friday: Lower on weak cash basis, weather
Soy-complex futures at the Chicago Board of Trade closed lower and near the session lows Friday, on a corrective pullback from Thursday's gains. Weaker U.S. cash soy basis levels and continued bearish Corn Belt weather "anchored" the market, said Don Roose with U.S. Commodities in Des Moines.
November soys closed down 17 3/4 cents. August soys closed down 3 1/2 cents at US$10.20 a bushel.
After Thursday's strong rally in the soy-futures markets, cash basis levels weakened after Thursday's close, reflecting tepid demand for U.S. soys.
Price pressure gradually built in the soy complex Friday, amid technical-based selling and a lack of supportive news, said another analyst. Initial pressure was mostly tied to profit-taking, although some fresh selling entered the market at midday, said the analyst.
Corn Belt weather remains a key bearish factor for the soy-complex futures. There is no threatening weather in the Corn Belt forecast for the next 10 days, said Roose. The past 24 hours saw rain and showers through the eastern Corn Belt and mostly dry weather in the western portion. The forecast calls for mostly dry conditions Friday, with a few scattered showers and temperatures near normal.
China will attempt to sell more soys next week, according to an official Chinese government Web site. The government will try to sell 500,000 metric tonnes of soys. This week, an attempted sale of the same amount failed due to an asking price that was too high. Roose said China will continue to be an important market factor for soys in the coming weeks, as traders watch for demand coming from China and keep an eye on the nation's government grain auctions.
The soy complex "is in a technical market right now," said Roose. Technically, November soys are trapped in a three-week-old sideways trading range on the daily chart, said a technical analyst. The fact that prices on Friday couldn't show follow-through strength from Thursday's gains is a bearish clue, suggesting more sideways to lower price action, he said.
Prices are still in a six-week-old downtrend on the daily bar chart. The next upside price objective for the bean bulls is to push and close November prices above solid technical resistance at US$9.40 a bushel. The next downside price objective for the bears is pushing and closing prices below solid technical support at the July low of US$8.81 1/4 a bushel.
Soy Products
Soy product futures closed lower and nearer the session lows Friday. Soy oil was the weakest, finishing the week at a technically bearish weekly low close. Both of the products remain in technical downtrends and the bears have the technical advantage, said the technical analyst. December soy oil closed down 78 points at 34.59 cents a pound. December soy meal futures closed down US$4.50 at US$279.70 a tonne.
