October 23, 2007

 

CBOT Soy Review on Monday: Prices slump on US dollar gains, harvest

 

 

Chicago Board of Trade soybean futures stumbled Monday under pressure from a stronger U.S. dollar and the advancing U.S. harvest, analysts said.

 

November soybeans settled 6 3/4 cents lower at US$9.76 1/2 and January soybeans ended 7 1/2 cents lower at US$9.93 3/4. December soymeal settled US$0.60 lower at US$275.70. December soyoil finished 34 points lower at 40.22.

 

The soybean market retreated in response to the strength in the U.S. dollar as the stronger greenback makes U.S. commodities less attractive to foreign buyers, analysts said.

 

The dollar's bounce sparked broad-based selling, with favorable harvest weather forecasts for the central U.S. and improved planting weather in Brazil helping pin prices in negative territory, analysts added.

 

Weakness in outside inflationary markets kept the defensive tonnee alive, but a midday rally in wheat futures, the dollar coming off its highs together with crude oil trimming its losses enabled futures to briefly edge into positive territory, a CBOT floor broker said.

 

Nevertheless, without any fresh supportive news to sustain the gains, futures retreated back into negative territory down the stretch, he added.

 

The DTN Meteorlogix forecast said the U.S. weather pattern offers a better outlook for corn and soybean harvest in the Midwest, especially the western half of the region, during this week compared to the prospects offered at the end of last week. The forecast calls for rainfall of up to one and one-half inches in the Delta and one inch over the eastern Midwest during this week. However, the hard-hit rain areas of the western Midwest have a drier weather outlook. This trend will allow harvest conditions to improve through the western Midwest, Meteorlogix said.

 

In Brazil, the two top soybean-growing states, Mato Grosso and Parana, both were mostly dry over the weekend. However, both states have rainfall of up to one and one-half inches in store during this week. This trend is beneficial for soybean planting and early growth. Soil-moisture levels for planting and development of the crop will improve after a delayed start to the planting season due to hot, dry weather, Meteorlogix reports.

 

The USDA is scheduled to release its weekly crop progress report Monday at 4 p.m. EDT. Analysts anticipate the U.S. soybean harvest at 75% to 80% complete.

 

In pit trades, MF Global bought 300 January, Fortis sold 300 November, and Iowa Grain and UBS Securities each sold 300 January.

 

 

SOY PRODUCTS

 

Soy product futures fell in unison with soybeans, caught up in broad-based speculative selling. Soyoil futures were the downside leader, under pressure from bearish influence of sharply lower crude oil futures for most of the day, analysts said.

 

Soymeal futures ended down, following the lead of the rest of the complex in the absence of fresh fundamental news to direct prices, analysts said.

 

December oil share ended at 42.18% and the November/December crush ended at 72 1/2 cents.

 

In soymeal trades, JP Morgan bought 300 December and sold 200 December, Tenco sold 600 March, and MF Global sold 200 December.

 

In soyoil trades, Bunge Chicago bought 300 December, and Tenco sold 500 December and 1,000 March.