September 4, 2008

 

CBOT Soy Review on Wednesday: Tumbles on outside markets, midwest rain

 

 

Chicago Board of Trade soybean futures tumbled to two-week lows Wednesday, pressured by outside market influences and rains heading into the U.S. Midwest crop belt.

 

September soybeans settled 50 1/2 cents lower at US$12.51 and November soybeans ended 47 cents lower at US$12.51 1/2.

 

December soymeal settled US$13.40 lower at US$342.00 per short tonne. December soyoil finished 159 points lower at 51.24 cents per pound.

 

The cross currents of outside market weakness and Midwest rains that will be most beneficial to soybean crops in the U.S. provided reasoning for the market's declines, said Don Roose, president U.S. Commodities.

 

General selling across commodity markets, with crude oil and metal futures lower and the U.S. dollar firmer set the stage for the losses.

 

Technically inspired selling was featured as well, with declines accelerating once the most active November future penetrated support at Tuesday's lows. Pre-placed sell-stop orders were activated at Tuesday's low to firmly planting prices in negative territory.

 

However, futures managed to end well off session lows, rebounding on end of the day short-covering and ideas Midwest rains only mask maturity issues, Roose said. The market has to respect maturity issues, as cool Midwest temperatures slow development and opens the door for crops not to mature ahead of a fall frost, Roose added.

 

Meanwhile the uncertainty of the 2008 soy crop in the face of tight stocks remain underlying features to keep the bottom from falling out beneath futures.

 

The DTN Meteorlogix forecast for the central Midwest calls for a round of moderate to heavy rain during the next two days. Heavy rains, associated with Tropical Depression Gustav, should track through Illinois, southeast Wisconsin, northwest Indiana and Michigan. Rains of one to four inches and locally heavier will occur in these locations. Some of the heavy rain may also extend west as far as southern Iowa. These rains offer the potential to benefit late-season soybean development, Meteorlogix said.

 

In pit trades, speculative fund selling was estimated at 4,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures stumbled to two-week lows as well, moving in unison with the sharp declines in soybeans. Broad-based speculative selling was featured, with soyoil futures influenced by spillover weakness from crude oil futures and weakness in world vegoil markets, analysts said.

 

December oil share ended at 42.83% and the November/December crush ended at 64 1/2 cents.

 

Speculative fund selling was estimated at 2,000 lots in soyoil, and 1,000 lots in soymeal.