August 14, 2009

 

CBOT Soy Review on Thursday: Tumble late; early buying exhausted

 

 

Chicago Board of Trade soybean futures plunged Thursday, reversing their early gains on technically inspired selling and a lack of fresh bullish news to underpin prices.

 

CBOT August soybeans ended 28 3/4 cents lower at US$11.87 1/4, September settled 27 1/4 cents lower at US$10.65 1/4, and November soybeans finished 25 1/4 cents lower at US$10.18 3/4. In pit trades, speculative fund selling was estimated at 6,000 lots in soybeans, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

December soymeal ended US$5.60 lower at US$306.90. December soyoil finished 95 points lower at 38.27 cents per pound.

 

The lack of follow-through buying after futures scored an upside breakout of their recent trading band attracted speculative selling interest, with commercial selling surfacing to temper upward movement as well, said John Kleist, broker/analyst with Allendale Inc.

 

Weather forecasts pointing to benign near-term conditions for developing crops, coupled with technical pressure, served as warning signs to bullish traders that maybe the market is running out of upside steam, Kleist added.

 

Futures initially spiked to near two-month highs on supportive outside market influences, solid weekly export sales and concerns an early fall frost could cut production potential for a crop that has little room for error.

 

However, the market failed to uncover follow-through buying to satisfy upside technical objectives and with frost worries a little premature at this point in the season, traders took the opportunity to trim risk exposure, said Dan Basse, president AgResource Co.

 

"Frost concerns will continue to support prices on breaks, but you really don't worry above freezes until after the Labor Day holiday," Basse added.

 

The DTN Meteorlogix weather forecast said conditions have cooled a bit in the Plains and western Midwest, to around normal levels. The eastern and southern Midwest is still several degrees above normal, but that area too will drop this weekend and into next week.

 

Western Midwest areas - Iowa, Minnesota, and Wisconsin - will get from a tenth of an inch in the north to an inch in Iowa. In the eastern Midwest, from Arkansas through Illinois into Michigan little or no rain is seen for the next several days, Meteorlogix said.

 

On tap for Friday, the National Oilseed Processors Association will release its monthly soybean crush report for July at 8:30 a.m. EDT (1230 GMT). The report is expected to show a decline in soybean crush rates for July to near 130.5 million bushels from the previous report, according to a survey of industry analysts. NOPA soyoil stocks in June are expected to decrease to near 2.859 billion pounds from the 2.907 billion pounds reported for June.

 

 

Soy Products

 

Soy product futures tumbled, backpedaling from early price strength in unison with soybeans. The inability of futures to expand upon early-session gains uncovered technical pressure to send buyers running for cover, analysts said. A lack of fresh supportive news, with lackluster weekly export sales, provided little incentive for buyers underpin prices, analysts said. Soyoil lost product share to soymeal on adjustments in the soy product spread relationship.

 

December oil share was 38.46%, while the November/December soybean crush ended at 77 1/2 cents.