October 14, 2009

 

CBOT Soy Review on Tuesday: Drift lower; take breather from uptrend

 

 

Chicago Board of Trade soy futures settled lower Tuesday, taking a breather from its recent uptrend amid the uncertainty of rains in the Midwest next week.

 

CBOT November soy finished 6 cents lower at US$9.93 per bushel.

 

December soymeal ended US$1.00 lower at US$306.30 per short tonne. December soyoil finished 49 points lower at 36.06 cents per pound. In pit trades, speculative funds were estimated sellers of 8,000 lots in soy, and 2,000 lots in soyoil.

 

Profit taking on prior gains was featured, as overbought conditions and a lack of a definitive push from outside financial markets allowed futures to consolidate, said John Kleist, broker/analyst with Allendale Inc.

 

Technical pressure added to the weak tonnee, as the inability of nearby contracts to hold above the psychological US$10.00 per bushel level uncovered preplaced sell orders.

 

The market experienced two-sided action, with speculative buying limiting declines on price breaks, as there is just enough uncertainty surrounding rains moving across the Midwest next week to provide support, Kleist said.

 

Forecasts pointing to drier weather in the central U.S. next week applied pressure initially. A break from the rains is seen opening the door for harvesting to pick up and ease the tightness of available soy supplies for end users.

 

The market received buying on breaks amid tight nearby supplies, but reports of active harvesting north of Interstate 80 provided weakness to take some edge off the market, said Dan Basse, president AgResource Co. in Chicago.

 

Looking ahead, harvest activity next week and the value of the U.S. dollar will determine near term price trends moving forward, Basse added.

 

T-Storm Weather said killing frosts and freezes on Sunday morning will affect portions of Illinois, Indiana, and Iowa that were unaffected last weekend.

 

Next week, a much warmer pattern affects all areas. A storm system also approaches the central U.S. and either, stalls across the Rockies, or rolls eastward with widespread rain across most corn and soy next Tuesday-Wednesday, T-storm Weather reported. Either way, "we expect light rainfall in at least the northwest third to half of the corn-belt, which means that sluggish harvesting rates return or continue after four to five days of drying," T-storm Weather said. Further east, recent history favors a continuation of rainfall after three to five days of drying, though the exact speed, intensity, and path of the storm system need to be resolved with certainty, T-storm Weather said in a midday forecast.

 

U.S. Department of Agriculture will release its weekly crop progress report at 4 p.m. EDT, with harvest progress expected to be unchanged from the prior week's 68% good to excellent.

 

 

Soy Products

 

Soy product futures ended mostly lower, keeping pace with declines in soy. Soymeal futures experienced two-sided action, following the lead of soy, as the uncertainty of nearby availability of soy for crushing kept a mixed tonnee in the market.

 

Soyoil futures stumbled succumbing to meal/oil spreading and late weakness from crude oil futures. A lack of fresh supportive news served as the catalyst to encourage participants to book profits on recent gains, analysts said.

 

December oil share was 37.06%, while the November/December soy crush ended at 77 1/2 cents.