October 28, 2009

 

CBOT Soy Review on Tuesday: Weather forecasts pressure soy

 

 

Chicago Board of Trade soy futures settled lower Tuesday, stumbling to two-week lows, as the market continued to extract risk premium on favorable harvest weather outlooks for next week.

 

CBOT November soy finished 13 cents lower at US$9.72 per bushel, and Jan soy ended 12 1/4 cents lower at US$9.76 1/2.

 

December soymeal ended US$7.20 lower at US$287.60 per short tonne. December soyoil finished 15 points lower at 37.48 cents per pound. In pit trades, speculative funds were estimated sellers of 5,000 lots in soy, and 1,000 lots each in soyoil and soymeal.

 

Private weather forecasters continued to point to drier weather conditions for the corn-belt next week, allowing traders to discount this week's harvest delays.

 

The market is taking risk premium out of prices on ideas Midwest farmers will get back to harvesting next week, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The absence of clear outside market directives kept futures chopping around for most of the day, until a mild bounce in the U.S. dollar and midday weather outlooks confirmed drier outlooks uncovered fresh selling interest.

 

Technical selling was featured as well, with declines accelerating once most active nearby contracts managed to challenge chart support near the low end of the market's recent trading range, near the US$9.75 per bushel level.

 

Additional selling was triggered from reports of active selling of soy call options, a CBOT floor trader said.

 

The T-storm Weather forecast said widespread and heavy rain will affect soy from Wednesday night through Friday night. Flooding occurs in the Delta due to upcoming rain, while rain ends and drying begins for most of the crop belt Friday night.

 

Next week, improved weather for drying and harvesting occurs due to a lack of substantial precipitation in the corn-belt. Warmer-than-average weather for the first half of next week will be limited to southern growing areas. The next major storm system for the central U.S. is not immediately foreseeable, which means that at least one week of dry weather follows this week's rain, T-storm Weather said in a forecast.

 

 

Soy Products

 

Soy product futures ended lower across the board, with soymeal leading the declines. Soymeal dropped to nearly 3-week lows, succumbing to pressure from sluggish domestic demand and outlooks for a pick up soy availability for crushing as harvest activity picks up, analysts said.

 

Soyoil futures ended lower, but continued to regain product share value on spreads, buoyed by weakness in soymeal, spillover support from crude oil and solid underlying export demand, analyst said.

 

December oil share was 39.4%, while the November/December soy crush ended at 71 1/2 cents.