October 21, 2009

 

CBOT Soy Review on Tuesday: Dips on profit-taking, turnaround Tuesday

 

 

Chicago Board of Trade soy futures tumbled Tuesday as traders took profits following a rally Monday, but analysts said further losses look limited.

 

November soy fell 13 3/4 cents to US$9.82 1/2 a bushel, and January soy dropped 15 1/4 cents to US$9.85 1/4. December soyoil finished 12 points lower at 37.47 cents per pound, and December soymeal closed down US$5.80 at US$292.50 per short tonne.

 

Soy dropped in "Turnaround Tuesday" action after the market on Monday priced in a supportive weather outlook, said Tim Hannagan, analyst for PFG Best. Forecasts for this week call for rain to fall throughout U.S. corn and soy areas.

 

"That's going to stall the harvesting again," Hannagan said.

 

Harvest delays remain supportive amid worries about yield and quality loss, traders said. The crop was 30% harvested as of Sunday, below the average of 72%, according to the U.S. Department of Agriculture.

 

Producers have been advancing the harvest since Sunday due to warm, dry weather, traders said. However, the market's downside is "fairly limited," given concerns about wet weather and expectations for the U.S. dollar to continue weakening, Hannagan said.

 

Market participants were buying breaks Tuesday amid worries about the weather and on ideas that the U.S. dollar will continue to weaken and crude oil will strengthen, Hannagan said. MF Global advised traders to look for a consolidation in soy, with a risk of further upside movement, if crude oil and the U.S. dollar sustain current trends.

 

The soy harvest is the priority for producers this week, but MF Global said it suspects that at least one-third of the U.S. bean crop will be in field next month. That would be more than double the average of un-harvested beans in November, the firm said in a research note.

 

Commodity funds sold an estimated 5,000 contracts.

 

 

Soy Products

 

CBOT soy product futures finished weaker with soy. The soy products pulled back from rallies Monday in the "Turnaround Tuesday" trade, analysts said.

 

Weakness in crude oil and strength in the U.S. dollar were bearish influences on CBOT soy and grains Tuesday, analysts said. Firm crude oil and a weak dollar helped push grain and soy prices higher Monday.

 

Commodity funds sold an estimated 1,000 soyoil contracts.