July 30, 2008

 

CBOT Soy Review on Tuesday: Stumbles; lacks sustainable weather threat

 

 

Chicago Board of Trade soybean futures ended lower Tuesday, stumbling on a lack of a sustainable Midwest weather threat, and bearish outside market influences.

 

August soybeans settled 16 cents lower at US$13.84 1/4 and November soybeans ended 5 cents lower at US$13.91.

 

December soymeal settled US$5.20 higher at US$369.50 per short tonne. December soyoil finished 152 points lower at 59.08 cents per pound.

 

The market set a new swing low for the current move, as weather forecasts provided no indication of any sustainable heat risks in the Midwest, opening the door for futures to trim premium from prices, said John Kleist, broker/analyst with Allendale Inc.

 

However, midday outlooks pointing to hotter and drier conditions did manage to put some edge on prices with end-user buying and technical support beneath prices keeping futures hovering within a five-day trading range, Kleist added.

 

Midday weather models had a warmer bias for the Midwest and removed quite a bit of rain for next week. However, looking at the big picture nothing has really changed, with several days of very warm, humid conditions on tap for the Midwest.

 

Weather models have shifted some rain out of the Midwest for next week, but given the area's current moisture profile, the dryness should not be a problem, said Joel Widenor, meteorologist with Cropcast Weather Services.

 

The heat and humidity should not adversely impact soybean crops, but heat and dryness in the U.S. Delta and the fringe areas of the soybean belt is another concern that remains an underpinning influence, traders said.

 

Nevertheless, a firmer U.S. dollar, weakness in crude oil futures and sharp declines in Asian markets overnight set the stage for the losses, but November futures did find chart support at the contract's pre-June flood highs, analysts added.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil continuing to lose ground to soymeal on spreads. Soyoil futures tumbled to nearly two-month lows, succumbing to spillover pressure from crude oil and overnight weakness in Asian vegoil markets, analysts said. Meal/oil spreading remained a feature, with talk of the potential for declining demand amid reports China will sell some vegoil reserves weighed on prices, analyst added.

 

Soymeal futures ended higher, bouncing from earlier losses on end user buying, technical short covering and spreading between the products, traders said.

 

December oil share ended at 44.43% and the November/December crush ended at 71 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 3,000 lots.