October 17, 2009

 

CBOT Soy Review on Friday: Soy stumble on harvest weakness

 

 

Soy futures on the Chicago Board of Trade ended lower Friday, declining under the weight of harvest pressure.

 

CBOT November soy finished 5 1/2 cents lower at US$9.77 1/2 per bushel.

 

December soymeal ended US$1.50 lower at US$294.70 per short tonne. December soyoil finished 16 points higher at 36.94 cents per pound. In pit trades, speculative funds were estimated sellers of 3,000 lots in soy. Fund buying was estimated at 1,000 lots in soyoil.

 

An open window of opportunity for an active harvest weekend amid a warmer and drier weather outlook for the Midwest served as the catalyst to attract sellers, analysts said.

 

Pre-weekend hedging was featured with profit-taking from the market's recent rally aiding the defensive tonnee. Overall activity was subdued with futures more in a consolidation mode amid the absence of fresh fundamental support.

 

Strength in the U.S. dollar was another bearish influence on prices, but a late bounce in crude oil and metals markets limited downside pressure, traders said. The uncertainty of harvest opportunities beyond Tuesday provided underlying support, as traders were uncomfortable extracting additional risk premium in the event the harvest window closes quickly, a CBOT floor analyst said.

 

T-Storm Weather said cold weather continues through Saturday in the U.S. Midwest. Warming will begin Sunday with maximum temperatures in the 60s Fahrenheit from Sunday to Wednesday.

 

While the warmth accelerates drying rates, rain returns to the region Tuesday and Wednesday across the northwest half of the Midwest. Rain spreads eastward to include the southeast half Thursday and Friday. Widespread amounts of 0.33 inch to 0.67 inch rains are most sensible for next week given some uncertainty regarding the speed and path of the storm, T-storm Weather said.

 

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.

 

 

Soy Products

 

Soy product futures ended mixed, with soymeal stumbling in the footsteps of soy. The unwinding of meal/oil spreads added to the defensive tonnee in soymeal, traders said.

 

Soyoil futures managed to divorce themselves from the bearish tonnee in the rest of the soy complex. A late bounce in crude oil futures and the adjustments in the meal/oil spread relationship provided the support to attract buyers to the market, analysts said. The rebounding of the energy market served as the catalyst for soyoil's upward momentum, as futures settled at a new high for the week while climbing to a new seven-week high in the process.

 

December oil share was 38.54%, while the November/December soy crush ended at 77 1/4 cents.