October 16, 2009

 

CBOT Soy Review on Thursday: End mixed, beans slip on weather shift

 

 

Soy futures on the Chicago Board of Trade ended lower Thursday, backpedaling on speculative selling amid harvest opportunities and overbought conditions.

 

CBOT November soy finished 11 cents lower at US$9.83 per bushel.

 

December soymeal ended US$9.50 lower at US$296.20 per short tonne. December soyoil finished 60 points higher at 36.78 cents per pound. In pit trades, speculative funds were estimated sellers of 6,000 lots in soy, and 1,000 lots in soymeal. Fund buying was estimated at 2,000 lots in soyoil.

 

The correction in prices was attributed to the extraction of some risk premium as some weather models pointed to less Midwest rain than was projected Wednesday.

 

Drier Midwest weather is seen creating a window of opportunity for farmers rapidly harvest crops and replenish pipeline supplies in the transition from old crop to crop, analysts said. "However, I have to say that the weather models today did not look all that different than yesterday, and that the weakness in the grains was more fund-inspired and technically-inspired due to overbought conditions and the market looking tired of running higher," said Mike Zuzolo, president of Global Commodity.

 

Soy remained on the defensive throughout on profit-taking from its recent rally. The absence of an upside push from outside markets limited buyer interest as well. However, soy did trim its losses near midday, supported by a short covering bounce in soyoil amid the bullish turnaround in crude oil futures.

 

Looking ahead, price trends will remain tied to the weather and the ability of farmers to harvest record 2009 crops as will the influence of outside financial markets on speculative fund activity, analysts said.

 

Cropcast Weather Services said it does appear that drier weather will finally return to much of the Midwest region Friday through Monday, which should allow dry down to improve and some harvesting to occur. "We can't expect the favorable conditions to last too long, though, and indeed another storm system is poised to return to the region late Tuesday through Thursday of next week," said Don Keeney, a Cropcast meteorologist.

 

There remains some weather model discrepancy regarding this system, with the GFS being a bit drier and showing more rains in the far northwest Midwest, while the European model is much wetter and focuses heavier rainfall across a broad portion of the west central Midwest. "Our official forecast is a blend of the two, being a little wetter than the GFS in the southwestern Midwest but not quite as wet as the European," Keeney said.

 

On tap for Friday, U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Oct. 8 to be in a range of 400,000 to 600,000 metric tonnes. Soymeal export sales are seen between 75,000 and 200,000 tonnes, while soyoil sales are pegged between 10,000 and 30,000 tonnes.

 

 

Soy Products

 

Soy product futures ended mixed, with soyoil gaining product share on adjustments in the meal/oil spread relationship. Soyoil set 7-week highs during the session picking-up strength and short-covering off of the turnaround in the crude and unleaded gas markets, Zuzolo said.

 

Soymeal futures ended lower succumbing to spillover pressure from soy.

 

December oil share was 38.24%, while the November/December soy crush ended at 73 1/4 cents.