October 29, 2008
CBOT Soy Review on Tuesday: Lost early gains, report disappoints traders
Chicago Board of Trade soybean futures disappointed traders with a double-digit drop, following a cut in the government's estimated soybean acreage.
The November soybean contract dropped 14 1/4 cents to close at US$8.78 3/4 per bushel, after trading as high as US$9.43. January soybeans fell 9 1/2 points to US$8.88 a bushel, after hitting a high of US$9.48.
December soymeal dropped US$9.50 to US$266.80 per short tonne. December soyoil finished 16 points higher at 31.88 cents per pound.
Funds sold an estimated at 1,000 lots in soymeal and bought 1,000 lots in soyoil, while fund activity was termed even in CBOT soybean contracts.
"It was good trading...for about five minutes," a CBOT floor trader said.
The most optimistic traders hoped the USDA would cut about 2 million acres to reverse the bearish affects of 2.2 million acres the department "found" earlier in the month, traders say.
Despite shedding 1.1 million acres from its harvest projection and trimming 2008-2009 ending stocks to 205 million bushels from 220 million bushels, the USDA disappointed traders who tried to buy into a rally.
The trade stayed weak into the close as people unwound positions they added overnight, a CBOT floor trader said.
The USDA cut planted acreage to 75.9 million acres in soybeans from 77 million.
The report removes some of the supply cushion the markets thought they had, said Don Roose, president of U.S. Commodities in Des Moines.
"Nevertheless, the government had to make adjustments in demand projections, and that sets up a little more uncertainty for the trade," Roose said. "This will force the market to keep some more risk premium in the market, particularly with the uncertainty with Brazil and Argentina soybean production."
Soy-product futures closed mixed Tuesday.
December oil share ended at 37.4% and the November/December crush ended at 59 cents.