August 11, 2009

 

CBOT Soy Review on Monday: Retreats on less threatening weather

 

 

Soy futures at the Chicago Board of Trade backpedaled Monday, retreating amid less threatening weather for Midwest crops and positioning ahead of Wednesday's crop reports.

 

CBOT August soys ended 14 cents lower at US$11.70 1/2, and November soys finished 28 1/2 cents lower at US$10.10. In pit trades, speculative fund selling was estimated at 4,000 lots in soys and 1,000 lots in soymeal.

 

December soymeal ended US$13.30 lower at US$305.70. December soyoil finished 29 points lower at 37.20 cents a pound.

 

Last week, the market rallied sharply on threatening weather forecasts for central U.S. crops, but forecasts now call for more normal August weather conditions moving forward, said Brian Hoops, president Midwest Market Solutions.

 

The change in weather opened the door for traders to trim some risk premium from prices in conjunction with profit-taking ahead of Wednesday's crop reports, Hoops said.

 

The unwinding of soys versus corn and wheat spreads was featured as well, with traders reducing risk exposure in the event of a surprise in the U.S. Department of Agriculture's production and supply-and-demand forecasts.

 

The absence of outside market leadership kept attention on weather, but strength in the U.S. dollar and lower-than-expected export inspections added to the defensive theme, said Mike Zuzolo of Global Commodity Analytics & Consulting LLC.

 

Cropcast Weather Services said notable rainfall returned to northern crop areas of the Midwest in the past weekend, helping to significantly ease lingering dryness. Rainfall is expected to cross central and southern portions of the region over the next two days, helping to maintain favorable moisture in those areas for late soy growth, Cropcast forecasts.

 

Temperatures should warm again during the six-to-10-day period, further accelerating crop growth, with no major heat foreseen at this time, Cropcast reports.

 

The USDA will release its weekly crop-progress report at 4 p.m. EDT (2000 GMT) Monday. Analysts anticipate the percentage of soy crops rated good to excellent to decline by 1 to 2 percentage points from the previous week.

 

The USDA is scheduled to release its first 2009 crop-production estimates based on field surveys and its monthly supply-and-demand estimates Wednesday at 8:30 a.m. EDT (1230 GMT).

 

The average of analysts' estimates projects a crop size of 3.213 billion bushels with a yield of 42.1 bushels per acre. The averages ranged from 3 billion to 3.275 billion bushels for production and 40.9 to 43.5 for yield.

 

 

Soy Products

 

Soy product futures prices fell in unison with soys. Soymeal futures dropped more than 4% of their value Monday while losing product share to soyoil on adjustments in meal/oil spread relationships, analysts said. Less threatening weather for U.S. soys and a firmer U.S. dollar served as catalysts to firmly plant futures in negative territory.

 

Soyoil futures ended lower, but gained versus meal on spreads. Weakness in crude oil futures, a firmer U.S. dollar and ample supplies kept pressure on prices, traders said.

 

December oil share was 37.81%, while the November/December soy crush ended at 71 3/4 cents.