September 10, 2009

 

CBOT Soy Review on Wednesday: Crop outlooks, weather weigh on prices

 

 

Chicago Board of Trade soy futures stumbled Wednesday, backpedaling on large crop outlooks and bearish weather in the absence of a strong outside market influence.

 

CBOT September settled 7 1/2 cents lower at US$9.61 1/2 per bushel, and November soy finished 8 cents lower at US$9.28 1/2 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$5.30 higher at US$348.80 per short tonne, and December soymeal ended US$0.80 higher at US$285.30. December soyoil finished 52 points lower at 34.28 cents per pound.

 

Favorable near-term weather and the potential for record 2009 production loomed large over the market heading toward Friday's crop production report, analysts said.

 

In the absence of a bullish spark from outside markets, futures had little fundamental support to mount another upward push. A lack of a crop threat took the fear of tight supplies out of the equation, with the availability of new harvest soy and trade ideas that production will increase if crops avoid a September frost keeping prices on the defensive.

 

Technical selling was featured in the declines as well, with overhead chart resistance near US$9.40 basis for the November contract a formidable level to overcome without a fresh catalyst to attract buyers.

 

However, downside pressure was limited, as the uncertainty of final crop yields with an extended growing season needed for Midwest soy to reach potential an underpinning feature. Meanwhile, solid export demand is another factor that softens the blow of big crop outlooks, a CBOT floor analyst said.

 

The U.S. Department of Agriculture on Wednesday announced private export sales of 110,000 metric tonnes of soy for delivery to China in the 2009-10 marketing year.

 

The USDA is scheduled to release its September crop report at 8:30 a.m. EDT (1230 GMT) Friday. The average of 22 analyst estimates puts crop size at 3.256 billion bushels with a yield of 42.4 bushels per acre. The averages ranged from 3.186 billion to 3.309 billion bushels for production and 41.5 to 43.1 for yields.

 

The DTN Meteorlogix Weather forecast for the Midwest calls for temperatures to continue on a normal-to-above-normal track through the end of the weekend. Weekend temperatures will also range near to above normal.

 

Upper air forecast maps indicate continued mild conditions for the main U.S. crop areas during the time period ending Sept. 19. There is no threat of freezing temperatures through the next 10 days in the U.S. corn and soy belt, Meteorlogix said.

 

 

Soy Products

 

Soy product futures ended mixed, with soymeal supported by tight supplies and solid demand. Soymeal managed to regain some product share on adjustments in the meal/oil spread relationship.

 

Soyoil futures stumbled, retreating on meal/oil spreading. Spillover support from firmer crude oil futures was not enough to offset the weight of spreads, with pressure from large soyoil stocks aiding the defensive theme, analysts said.

 

December oil share was 37.58%, while the November/December soy crush ended at 76 1/4 cents.