August 15, 2009

 

CBOT Soy Review on Friday: Tumble; bearish influences pressure prices

 

 

Chicago Board of Trade soy futures ended sharply lower Friday, tumbling to two-week lows on speculative selling on a plethora of bearish influences.

 

CBOT August soys ended 87 1/4 cents lower at US$11.00, September settled 40 3/4 cents lower at US$10.24 1/2, and November soys finished 37 1/4 cents lower at US$9.81 1/2. In pit trades, speculative fund selling was estimated at 5,000 lots in soys, and 1,000 lots each in soymeal and soyoil.

 

December soymeal ended US$19.90 lower at US$289.00. December soyoil finished 48 points lower at 37.79 cents per pound.

 

The emergence of meaningful deliveries against the August contract, lower-than-expected crushing data, favorable near-term weather and bearish outside financial markets served as the catalysts to ignite speculative selling.

 

The combination of fundamental and outside pressure opened the door for the losses, with technical selling accelerating losses as prices slipped below major moving average chart support, analysts said.

 

The deliveries and slow crushing pace sparked ideas that the tightness of supplies may be easing, as declining meal demand and the U.S. Delta harvest approaching may allow the market to limp along without the threat of supplies running out in the near term, analysts said.

 

The market also reduced some premium, as the absence of a weather threat has the market factoring in the potential for higher yields than U.S. Department of Agriculture reported in its Aug. 12 report, traders added.

 

Meanwhile, the nearby August contract tumbled as it expired Friday, succumbing to liquidation pressure, as deliveries against the contract revealed there was potential for additional deliveries as there is a clear advantage to delivering soys, a cash connected CBOT broker said.

 

August soy deliveries totaled 227 lots. A customer account at Fortis issued 220 lots, while the house account at Bunge Chicago stopped 55 lots. The last trade date assigned was Aug. 11.

 

Looking ahead, crop scouts will embark on the 2009 Pro Farmer Midwest crop tour next week. The 2009 tour, which is sponsored by Pioneer, will have two legs, an eastern route that begins in Columbus, Ohio, and a western route beginning in Sioux Falls, S.D. The tour will conclude Thursday in Austin, Minn. State-by-state estimates will be released nightly, with the official crop estimate from Pro Farmer scheduled for release Aug. 21.

 

 

Soy Products

 

Soy product futures stumbled in step with the sharp declines in soys. Soymeal retreated on speculative sales, with fears of slowing domestic meal demand amid unprofitable feeding operations weighing on prices, analysts said. Soyoil futures ended lower, but gained product share on spreads. Spillover weakness from soys and crude oil served as the catalyst for the losses, but spreading between the products and supportive vegoil demand outlooks limited losses.

 

December oil share was 39.44%, while the November/December soy crush ended at 70 cents.