September 3, 2009

 

CBOT Soy Review on Wednesday: Extends losses; lacks crop threat

 

 

Chicago Board of Trade soy futures ended lower Wednesday, continuing their extraction of weather premium in the absence of frost/freeze scares.

 

CBOT September settled 4 3/4 cents lower at US$10.09 1/4 per bushel, and November soy finished 4 1/2 cents lower at US$9.51 per bushel. In pit trades, speculative fund selling was estimated at 3,000 lots in soy and 2,000 lots in soyoil.

 

September soymeal settled US$3.20 lower at US$348.50 per short tonne, and December soymeal ended US$3.80 lower at US$292.50. December soyoil finished 40 points lower at 34.70 cents per pound. Leftover selling from the market trimming risk premium from prices was featured, but after taking the bulk of the premium out in previous sessions, declines were muted, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

The absence of direction from outside financial markets helped extend the downtrend, with prospects of a bumper 2009 crop adding to the defensive theme. A lack of fresh export demand from China this week as well as technical weakness added further pressure to keep buyers out of the market, Hannagan said.

 

Supply concerns are beginning to fall by the wayside, and if the U.S. crop can escape a September freeze, there is great potential for record production, agronomists said.

 

Private crop estimates projecting bumper U.S. crops are also keeping buyers in a cautious mood.

 

However, big crops and improved weather are priced in the market, and with outside markets complacent, a short-covering bounce may be featured for the rest of the week, Hannagan added, as traders even out positions heading toward an extended holiday weekend.

 

Cropcast Weather Services said Wednesday's 30- to 60-day outlook has turned warmer across all of the Midwest. The outlook remains dry in the northeastern Plains and northwestern Midwest, but has turned slightly wetter in the southern Midwest.

 

On tap for Thursday, the U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Aug. 27 to be in a range of 400,000 to 750,000 metric tonnes. Soymeal export sales are seen between 50,000 and 200,000 tonnes, while soyoil sales are pegged between 10,000 and 40,000 tonnes.

 

 

Soy Products

 

Soy product futures followed soy lower in the absence of fresh fundamental news. Soymeal continued to backpedal on improved crop prospects for soy and expectations that outlooks for supply tightness will ease as the new harvest enters the cash pipeline from the Deep South.

 

Soyoil futures retreated in step with the rest of the complex. The market followed soy lower, with abundant stocks and the absence of directives from crude oil leaving futures without price support.

 

December oil share was 37.3%, while the November/December soy crush ended at 74 1/4 cents.