October 11, 2008

 

CBOT Soy Review on Friday: Drop daily limit on economic woes,USDA report

 

 

Chicago Board of Trade soybean futures tumbled Friday, dropping the exchange imposed daily trading limit on speculative liquidation amid global economic woes and bearish crop report data. CBOT November soybeans ended down the exchange-imposed 70-cent daily trading limit at US$9.10 a bushel, the lowest level on continuation charts since September 2007.

 

December soymeal settled US$20.00 lower at US$256.00 per short tonne. December soyoil finished 250 points lower at 37.29 cents per pound.

 

The market was battered by liquidation of long positions on worries over economic deflation and fears that global credit woes will negatively impact U.S. exports, said Terry Reilly, analyst with Citigroup in Chicago. Long positions are expectations prices will rise.

 

Outside markets played a major role in shaping price direction, with the U.S. stock market maintaining heavy losses over the course of the day and crude oil futures tumbling lower as well. Investors in an attempt to avoid risk in uncertain economic times exited positions in markets perceived as risky, analysts said.

 

The bearish influence of Friday's crop report added to the lower theme, as buyers kept there hands in their pockets.

 

U.S. Department of Agriculture projected a 2.2 million acre increase in harvested area, which more than offset a reduction in yields, an analyst said. With less demand for the soy products, soybean ending inventories rose 85 million bushels to 220 million.

 

"The data eases fears of the market running short of soybean supplies in the 2008-09 marketing year," Reilly added.

 

USDA reported 2008-09 soybean production at 2.983 billion bushels, up 49 million from the September estimate of 2.934 billion. The average of analysts' estimates anticipated a crop size of 2.920 billion bushels. The 2008-09 U.S. soybean yield was estimated at 39.5 bushels per acre, down from September estimate of 40.0. In pit trades, speculative fund selling was estimated at 4,000 lots.

 

Prices were synthetically trading in a range of US$8.75 to US$8.83 cents per pound basis the November contract in the options pit at the close, traders said.

 

CBOT soybeans will trade with expanded daily trading limits of US$1.05 a bushel Monday.

 

 

SOY PRODUCTS

 

Soy product futures dropped the exchange imposed daily limit, falling on speculative sales. The markets price actions mirrored soybeans, with the negative influence of global recession fears and slowing demand weighing on the products, analysts said.

 

December oil share ended at 42.14% and the November/December crush ended at 63 1/2 cents.

 

Soyoil prices were synthetically trading in a range of 36.75 to 37.00 cents per pound basis the December contract in the options pit on the close, traders said. Soymeal prices were synthetically trading in a range of US$248.00 to US$251.00 cents per pound basis the December contract in the options pit on the close, traders added.

 

Speculative fund selling was estimated at 1,000 lots each in soymeal and soyoil.

 

CBOT soymeal will trade with expanded daily trading limits of US$30.00 per short tonne, and soyoil will trade with expanded limits of 350 points Monday.