September 12, 2009

 

CBOT Soy Review on Friday: Extends downtrend on bearish crop outlooks

 

 

New crop soy futures on the Chicago Board of Trade stumbled Friday, sliding to their lowest levels in seven weeks on bearish crop outlooks in the absence of a near-term weather threat.

 

CBOT November soy finished 23 1/2 cents lower at US$9.03 per bushel. In pit trades, speculative fund selling was estimated at 5,000 lots in soy, and 1,000 lots each in soymeal and soyoil.

 

September soymeal settled US$11.00 lower at US$338.00 per short tonne, and December soymeal ended US$10.00 lower at US$275.50. December soyoil finished 35 points lower at 33.90 cents per pound.

 

"There is an overwhelming belief in the market that the 2009 U.S. soy crop's maturity levels will catch up and produce a larger crop than the U.S. Department of Agricultures' current record high projections," said Bill Nelson, analyst with Doane Advisory Service in St. Louis, Mo.

 

The USDA projected 2009 U.S. soy production at 3.245 billion bushels with a yield of 42.3 bushels per acre. The production figure was below the average Dow Jones survey estimate of 3.256 billion, with yields just off the average estimate of 42.4.

 

The absence of a frost threat is sparking assumptions that yields in key Midwest states will rise in accordance with the jump in yields reported for southern Midwest and Delta states by the USDA Friday, Nelson added.

 

Meanwhile, spillover weakness from sharp declines in crude oil and energies helped extend the defensive tonnee. Technical selling was a featured attraction on the price slide, with pre-placed sell orders activated once the most-active November contract penetrated chart support at recent lows and the psychological US$9.00-per-bushel level.

 

Seasonal weakness associated with reports of strong yields from harvests in southern areas helped overshadow supportive weekly export sales and lingering uncertainty of final yields amid the crops need for a frost-free month of September, Nelson added.

 

The DTN Meteorlogix Weather forecast for the Midwest features mild conditions. Crops in the Midwest region will continue to benefit from near- to above-normal temperatures for at least the next week. Filling crops would also benefit from rains during this period, mainly in the west.

 

On tap for Monday, the National Oilseed Processors Association will release its monthly soy crush report for August at 8:30 a.m. EDT (1230 GMT). Analysts surveyed by Dow Jones expect the report will show a decline for August down near 110.8 million bushels due to tight soy supplies.

 

 

Soy Products

 

Soy product futures retreated in unison with the bearish tonnee in soy. Prospects for large crops took its toll on soymeal and soyoil futures. Soyoil managed to outperform meal and soy, garnering support from wider-than-normal cash basis levels, as end users are finding soyoil attractive at current price levels, said Nelson.

 

Soymeal fell under the weight of soy, unable to feed off the higher-than-expected weekly export sales.

 

December oil share was 38.18%, while the November/December soy crush ended at 74 cents.