October 2, 2009

Soy futures on the Chicago Board of Trade ended lower Thursday, succumbing to outside market pressure and bearishness associated with the anticipation of a record fall harvest.

 

CBOT November soy finished 9 cents lower, at US$9.18 per bushel.

 

December soymeal ended US$4.70 lower, at US$280.80 per short tonne. December soyoil finished 26 points higher, at 34.59 cents per pound. In pit trades, speculative fund selling was estimated at 4,000 lots in soy, while speculative selling was measured at 1,000 lots in soyoil.

 

A firm U.S. dollar promoted broad based commodity weakness, with outlooks for big supplies to fill the cash pipeline in coming weeks serving as catalysts to keep prices on the defensive.

 

"Strong export demand and tight availability of nearby soy supplies remained underpinning features in the market, but its hard to get speculative buyers interested in pushing prices higher ahead of a big crop harvest," said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The strength of the dollar was a negative for prices, as "our currency" is what helps keep U.S. supplies the cheapest origin for world importers, Scoville said.

 

However, larger-than-expected weekly export sales, and slow harvest progress making sourcing cash soy tough, kept a floor beneath the market. Concerns that a return of rain showers to the southern soy growing area will further delay the availability of new crop soy limited losses as well.

 

Two-sided trade was consistent with previous trading sessions, as the market struggles to find lasting direction in the absence of fresh news to break the recent trading pattern.

 

Looking ahead, traders anticipate soy will remain range bound, with participants continuing to take a cautious approach until actual yield reports can be reported from harvest in the heart of the Midwest crop belt.

 

The DTN Meteorlogix weather forecast said wet and cool conditions in the U.S. Midwest during the next few days will also be unfavorable for maturing crops and the early harvest. Long-range charts suggest a chance for more frosty weather later in the 10-day period.

 

Showers and some rain return to the southern soy growing area Thursday night and early Friday. The weather next week also looks to be wetter. This is unfavorable for maturing crops and will likely mean additional harvest delays in the region, Meteorlogix said.

        

Soy Products

             

Soyoil futures ended higher for the third consecutive day, continuing to break away from the defensive tone in the rest of the soy complex. The unwinding of meal/oil spreads and strong export demand served as the catalysts for the market to gain product share value, analysts said.

 

Soymeal futures stumbled lower in step with soy. Pressure from a firmer U.S. dollar and lackluster weekly export sales put fundamental pressure on prices. However, tight availability of nearby supplies remained supportive features to limit downside risks, traders said.

 

December oil share was 38.11%, while the November/December soy crush ended at 80 1/4 cents.