August 21, 2009

 

CBOT Soy Review on Thursday: Mostly down, midwest frost concern stem sales

 

 

Soy futures on the Chicago Board of Trade ended mostly lower Thursday, as brisk export demand and early frost concern mitigated bearish Midwest weather.

 

November soy futures fell 1 cent to US$9.57, after reaching US$9.68 1/2 overnight and falling to US$9.52 in early pit trading. September soys rose 2 1/4 cents to US$9.99 1/4.

 

By the end of this week, at least 80% of the Midwest will have received 0.5 inch to 1.75 inches of rain, with heavier amounts in some locations, said Joel Widenor, director of Agriculture Services for Commodity Weather Group LLC.

 

The rains bring much-needed relief to dry areas, increasing confidence U.S. farmers will harvest a record soy crop. Also Thursday, crude oil futures fell from a seven-week high, removing a catalyst that boosted the soy complex earlier this week.

 

Still, crops in many areas are a few weeks behind normal and the possibility of an early frost lingers, analysts said, limiting soy sales.

 

"Near term, with the late crops and threat of frost, prices have to maintain a weather premium," said Darrell Jobman, a Kenosha, Wis.-based senior market analyst with TraderPlanet.com. An early Midwest frost "would be a big price boost."

 

An early frost can bring a growing season to a premature end, hurting yields. The first "killing" frost in the Midwest usually arrives from late September through mid-October, meteorologists said.

 

November soy futures may decline to US$8.80 to US$9.00, near the July lows, if the Midwest avoids frost through mid-September, Jobman said.

 

With an early frost or other bullish event, "you could have beans get back up to US$11.00," Jobman said. "At that point, if I was a farmer, I'd sell."

 

In other news, scouts on the Pro Farmer Midwest Crop Tour found above-average soy crops in Iowa Thursday.

 

In southern Minnesota, soy fields surveyed had good vegetation, but pod counts were lagging. As the scouts moved farther east, pod counts increased, but development was further behind.

 

Foreign demand for U.S. soys remains robust. Earlier Thursday, the U.S. Department of Agriculture reported net export sales of 274,900 metric tonnes for the week ended Aug. 13, up 6% from the previous week. Export commitments for the current marketing year are running almost 15% above last year's levels.

 

CBOT soy meal futures finished mixed, with nearby contracts supported by strong export demand. Soy oil fell near a three-week low.

 

December soy meal futures rose 10 cents to US$283.40 per tonne, while December soy oil futures fell 0.31 cent to 36.39 cents per pound, the lowest closing price since 35.80 cents on July 31.

 

Commodity funds sold an estimated 2,000 soy contracts and sold 1,000 soyoil contracts, CBOT floor sources reported.