September 5, 2009

 

CBOT Soy Review on Friday: Continues spiral on big crop outlooks

 

 

Chicago Board of Trade soy futures settled lower Friday, continuing their downward spiral for the fifth consecutive day on big crop outlooks and non-threatening weather.

 

CBOT September settled 21 cents lower at US$9.61 per bushel, and November soy finished 19 1/2 cents lower at US$9.22 per bushel. In pit trades, speculative fund selling was estimated at 4,000 lots in soy, and 1,000 lots in soyoil.

 

September soymeal settled US$9.80 lower at US$332.20 per short tonne, and December soymeal ended US$5.60 lower at US$281.10. December soyoil finished 42 points lower at 34.23 cents per pound.

 

The market has taken on a "big crop gets bigger mentality," as the absence of a weather threat generates record crop forecasts from private analytical firms, said Jack Scoville, analyst with Price Futures Group.

 

The large crop outlooks served as an anchor for prices, with technically inspired selling and a lack of support from outside financial markets keeping buyers on the sidelines.

 

The price weakness was a little surprising following a week of losses, particularly heading into an extended holiday weekend, Scoville said.

 

Many analysts anticipated the market would experience some consolidation ahead of the weekend, on the risk of exposure if weather forecasts turned bullish over the long weekend.

 

Meanwhile, weakening cash basis levels helped maintain the bearish tonnee, with reports of fresh supplies from the Deep South harvest ready to move into the cash pipeline, adding to the defensive theme.

 

Looking ahead, traders are expected to take a cautious view of the market, awaiting updated weather forecasts Tuesday and next week's crop production report.

 

CBOT markets will closed for Sunday evening and the Monday day session in observance of the Labor Day Holiday.

 

T-storm Weather said wetter weather affects the central U.S. and parts of the Canada prairies next week as a cool front slides east. However, since coolness should be disconnected from the Arctic, a damaging frost/freeze remains unlikely.

 

Risk management, research and brokerage firm Linn Group on Friday raised its projections for U.S. soy crops, traders said. Linn Group forecast the 2009-10 soy crop at 3.304 billion bushels with an average yield of 43.0 bushels an acre.

 

Risk management and brokerage firm Allendale Inc. on Friday projected U.S. soy production at 3.309 billion bushels. The firm's estimates for soy production and yield topped the U.S. Department of Agriculture's latest forecasts. Allendale pegged the average soy yield at 43.1 bushels.

 

In August, the U.S. Department of Agriculture put the U.S. corn crop at 12.761 billion bushels and soy output at 3.199 billion. The USDA is scheduled to release updated figures Sept. 11 at 8:30 a.m. EDT (1230 GMT).

 

 

Soy Products

 

Soy product futures ended lower with soy. Soymeal and soyoil continued to trade defensively, succumbing to the bearish theme in the market amid bumper crop prospects for soy.

 

December oil share was 37.79%, while the November/December soy crush ended at 73 1/4 cents.