September 2, 2009

 

CBOT Soy Review on Tuesday: Down; broad based weakness, extracts premium

 

 

Chicago Board of Trade soy futures stumbled Tuesday, backpedaling near 2-week lows on broad based commodity weakness and a lack of weather threats to developing crops.

 

CBOT September settled 86 cents or 7.8% lower at US$10.14 per bushel, and November soy finished 24 cents lower at US$9.55 1/2 per bushel. In pit trades, speculative fund selling was estimated at 5,000 lots in soy, 1,000 lots in soymeal, and 2,000 lots in soyoil.

 

September soymeal settled US$30.80 lower at US$351.70 per short tonne, and December soymeal ended US$8.80 lower at US$288.70. December soyoil finished 50 points lower at 35.10 cents per pound. In the absence of fresh export demand, futures were at the mercy of near term weather, with no threats of frost or a freeze in the Midwest for 10-days to 2-weeks enticing traders to extract weather premium from prices, said Joe Victor, analyst with Allendale Inc.

 

Normal weather conditions are seen as beneficial to soy crops needing to avoid a frost throughout September to reach the crops potential, Victor said.

 

Broad based weakness across the commodity sector and financial markets in general added to the defensive theme. Without any exciting demand news from China and a lack of a crop threat, buyers were very vulnerable to selling pressure, analysts said.

 

The nearby September contract tumbled, succumbing to liquidation pressure and the unwinding of bull spreads.

 

Cropcast Weather Services said Tuesday's 15-30 day outlook calls for above normal temperatures in the northern and eastern Midwest, with frost risks low in the central and eastern Midwest. The outlook maintains a wetter pattern in the southeastern and northwestern Midwest. The wet pattern in the southeastern Midwest and Southeast will slow soy maturation and harvesting there as well, Cropcast said.

 

 

Soy Products

 

Soy product futures stumbled in unison with soy. Soymeal dropped on spillover weakness from soy, with liquidation and unwinding of bull spreads producing 8% declines in the nearby September contract.

 

Soyoil futures settled lower, with losses fueled by weakness in soy, retreating crude oil prices and general outside financial market pressure.

 

December oil share was 37.85%, while the November/December soy crush ended at 65 3/4 cents.