September 14, 2009

 

CBOT Soy Outlook on Monday: Lower as weather china dispute weighs

 

 

Chicago Board of Trade soybean futures are expected to open weaker Monday following overnight losses as benign weather and a U.S. trade dispute with China weigh on the market.

 

Soybeans are called 5 cents to 10 cents lower. In overnight trade, November soybeans were down 8 cents to US$8.95 per bushel and January soybeans were down 10 cents to US$9.00.

 

October soymeal was down US$1.50 to US$279 per short tonne and November soyoil was down 37 points to 33.15 cents per pound.

 

Although there was a little concern over the weekend about some colder weather creeping into the Midwest late next week, traders said the threat seems minor and that in the meantime temperatures this week will be warm and favorable to the crop.

 

Analysts said outside markets could be an important factor in the market, and that a trade dispute between the U.S. and China could add pressure.

 

The dispute is "inherently bearish" for the grains and oilseeds, said Country Hedging analyst Sterling Smith.

 

He said "Wall Street does not care for this sort of thing at all," and that the grains and oilseeds have been somewhat dependent on stock prices.

 

But any trade war shouldn't affect soybeans immediately. "If (China goes) elsewhere to buy their beans that void will still be in the market, and prices will come back and fill that back in," he said. "But it could still result in a lower price for U.S. beans."

 

A trader said that given China's dependence on U.S. soybeans, "it's difficult to envision they would pick (soy) as a trade dispute item."

 

The U.S. Department of Agriculture on Monday announced that China has bought 113,000 metric tonnes of U.S. soybeans and that South Korea has bought 110,000 metric tonnes.

 

In other news, the soybean crush rate in the National Oilseed Processors Association's monthly soybean crush report declined from the previous month, to 112.6 million bushels. That was up slightly from trade expectations of 110.8 million bushels.

 

J.P. Morgan analyst Lewis Hagedorn said the report was "modestly supportive" but would not have a meaningful impact on prices.

 

Soybean futures on the Dalian Commodity Exchange led the agricultural complex downward Monday, amid the fallout on most commodities stemming from the U.S. decision Friday to impose punitive tariffs on Chinese tire imports. The benchmark May 2010 soybean contract fell 1.4% to settle at RMB3,562 a metric tonne.