August 28, 2009

 

CBOT Soy Review on Thursday: Mixed fundamentals promote choppy activity

 

 

Soy futures on the Chicago Board of Trade experienced another choppy, two-sided session Thursday, continuing to adjust to mixed fundamentals for old and new crop futures.

 

CBOT September settled 23 3/4 cents higher at US$11.14 1/4, and November soy finished 1/2 cent lower at US$9.96. In pit trades, speculative fund selling was estimated at 1,000 lots in soy, and 1,000 lots in soyoil.

 

September soymeal settled US$16.00 higher at US$379.00 per short tonne, and December soymeal ended US$2.00 lower at US$296.50. December soyoil finished 26 points lower at 36.83 cents per pound.

 

The market continues to "hang in the balance," struggling to find direction amid the uncertainty surrounding the potential of the 2009 U.S. soy crop, said Darrell Jobman, analyst with Traderplanet.com.

 

Traders have to maintain weather premium in the market due to the threat of a September frost for crops, Jobman said. Meanwhile, upside potential remains limited as traders factored in the potential for record soy production if the crop avoids freezing temperatures through September, he added.

 

Strong weekly exports sales and tight nearby supply remain bullish factors for prices, enabling futures to push higher in early action. However, a lack of follow-through buying near the highs on ideas the supportive features are priced in the market uncovered profit-taking pressure.

 

Mixed signals from outside markets aided the choppy tonnee, as traders take a cautious approach, keeping a close eye on weather forecasts as the market remains fearful of the premature growing season.

 

Meanwhile, DTN Meteorlogix said Midwest weather conditions will continue to feature much cooler temperatures this weekend through Monday. This does not mean a frost, as it is too early for that event, but it would mean slower development of crops for at least a few days.

 

In addition to cool temperatures, moderate-to-heavy rain in the Midwest brings a further slowdown to crop progress due to the additional wet conditions on crops. Rain and cool temperatures also increase the disease risk to soy, Meteorlogix said.

 

In demand news, the U.S. Department of Agriculture reported total weekly soy export sales were a net 2.054 million metric tonnes for the week ended Aug. 20. Sales for 2009-10 were a net 1.966 million metric tonnes.

 

 

Soy Products

 

Soymeal futures ended mostly lower, with the September meal contract the exception to the lower theme. Tight availability of nearby supplies and strong export demand serve as bullish forces to underpin prices, analysts said. Deferred months drifted lower, succumbing to spillover weakness soy and technical pressure.

 

Soyoil futures stumbled, retreating on speculative sales in the absence of fresh supportive inputs and mixed signals from outside markets.

 

December oil share was 38.26%, while the November/December soy crush ended at 61 1/2 cents.