August 26, 2009

 

CBOT Soy Review on Tuesday: Mostly lower on crop ratings, weather

 

 

Soy futures at the Chicago Board of Trade ended mostly lower, taking a pause from recent gains amid improved crop ratings and favorable weather for late developing crops.

 

The nearby September contract was the exception to the market's theme, climbing on tight availability of old crop stocks and worries surrounding the arrival of new crop supplies.

 

CBOT September settled 11 cents higher at US$10.91 a bushel, and November soys finished 8 1/2 cents lower at US$9.99. In pit trades, speculative fund selling was estimated at 4,000 lots in soys, and 2,000 lots in soyoil.

 

December soymeal ended US$1.40 lower at US$298.50 per short tonne. December soyoil finished 55 points lower at 37.17 cents per pound.

 

The jump in crop ratings to their highest levels since 1992 for conditions in late August served as a bearish influence on new crop futures, said Bill Nelson, analyst with Doane Advisory Service in St. Louis.

 

The ratings are sparking speculation of higher production potential if the crop can maintain favorable finishing weather.

 

"Its seldom that high crop ratings in August don't lead to a boost in U.S. Department of Agriculture's September crop production estimates," said Nelson.

 

The absence of definitive support from outside markets triggered some consolidation in the market following recent strong gains. However, downside pressure remains limited amid the risk of yield losses in the event of a September frost, as many late developing crops across the Midwest need an extended growing season to maximize potential, analysts say.

 

Futures received solid underpinning support early in the session, buoyed by export demand on confirmed soy sales to China. In addition, concerns surrounding a drought in China's soy growing regions provided a boost to briefly propel prices to new 1 1/2 week highs.

 

Meanwhile, Cropcast Weather Service's 15- to 30-day outlook is trending slightly warmer across the central Midwest, with above-normal readings expected in all but far southern areas. This would keep frost threats low across the corn and soy belts, which is critical for late crop growth since progress remains well behind normal, Cropcast said.

 

The outlook is trending wetter across the central and southwestern Midwest as well, with near- to slightly above-normal readings now expected there. This will slow drying of mature crops, although no significant wetness concerns are expected, Cropcast said in the forecast.

 

 

Soy Products

 

Soy product futures ended mostly lower. Soymeal finished mixed, with old crop contracts managing to climb on tight nearby supplies as crushers take downtime, and solid underlying demand. New crop futures backpedaled, succumbing to spillover weakness from deferred month soys amid the prospect of fresh supplies entering the pipeline.

 

Soyoil futures stumbled, pressured by spillover weakness from crude oil futures, meal/oil spreading and ample nearby stocks.

 

December oil share was 38.42%, while the November/December soy crush ended at 66 1/2 cents.