October 23, 2009

 

CBOT Soy Review on Thursday: Soy stumble on outside markets, hedging

 

 

Chicago Board of Trade soy futures ended lower Thursday, stumbling on bearish outside market influences and hedge related selling.

 

CBOT November soy finished 3 cents lower at US$10.05 1/2 per bushel, and Jan soy ended 2 3/4 cents lower at US$10.07.

 

December soymeal ended US$2.10 higher at US$300.80 per short tonne. December soyoil finished 26 points lower at 38.30 cents per pound. In pit trades, speculative funds were estimated sellers of 3,000 lots in soy, and 1,000 lots in soyoil.

 

A firmer U.S. dollar was an underpinning influence, with generalized commodity weakness applying pressure for most of the day.

 

Hedge related selling added to the defensive tonnee, as Wednesday's run up to 7-week highs stimulated some cash market sales, said Dan Basse, president AgResource Co. in Chicago.

 

The ability of futures to hover near the psychological US$10-per-bushel level in the midst of a record U.S. soy harvest was an attractive offer for producers.

 

The rolling of nearby positions kept spreads active, with front-month futures losing ground to deferred-month contracts on spreads.

 

However, losses remained limited, as harvest delays due to wet, cool weather and solid underlying demand provided support to keep a floor beneath the market. "If inclement weather persists, the cash market will have to stay well bid until the South American harvest amid record soy and soyoil sales that have to be filled," Basse said.

 

"Rain is really not a big issue, but if snow emerges it will produce field losses as soy pods will split," he added.

 

The DTN Meteorlogix weather forecast said the central Midwest will see from an inch to 2 inches of rain over the next few days. The DTN five-day precipitation map shows most of Indiana and Ohio getting at least an inch over the next few days. Totals in the Delta area are scattered, with the whole area getting at least a quarter inch and a few spots getting as much as an inch. Some areas in the western Midwest will get a break from the rain this weekend, but any short-lived respite will not be enough to dry down fields and let combines back in the fields, Meteorlogix said.

 

Temperatures in the central U.S. for this coming week will drop into the 30s Fahrenheit, and into the 20s F in some spots. The jet stream models show a deep trough in the midwestern U.S. The trough is expected to move northward and eastward, and keep cold and wet conditions in place for the central U.S. through next weekend, Meteorlogix forecast.

 

 

Soy Products

 

Soy product futures ended mixed, with adjustments in the meal/oil spread relationship featured attractions. Futures initially stumbled in step with soy and the bearish influence of outside market factors. Soymeal managed to end higher, finding support from tight nearby supplies and lower-than-expected Census Crush stocks data, analysts said.

 

Soyoil futures finished lower, losing product share value on spillover weakness from crude oil futures and higher-than-expected September inventories reported in the Census report.

 

December oil share was 38.88%, while the November/December soy crush ended at 77 1/2 cents.

 

U.S. soymeal stocks for September totaled 239,179 short tonnes, compared with the average estimate of 296,250, and soyoil stocks totaled 2.880 billion pounds, according to data released by the U.S. Census Bureau Thursday. Analysts, on average, expected 2.784 billion pounds.