October 29, 2009

 

CBOT Soy Review on Wednesday: Soy down on harvest, outside pressure

 

 

Chicago Board of Trade soy futures ended lower Wednesday, continuing its recent correction on bearish harvest outlooks, outside market influences and end-of-month position squaring.

 

CBOT November soy finished 5 cents lower at US$9.68 1/2 a bushel, and January soy ended 6 cents lower at US$9.70 1/2.

 

December soymeal ended US$3.70 higher at US$291.30 a short tonne, and December soyoil finished 62 points lower at 36.86 cents a pound. In pit trades, speculative funds were estimated sellers of 3,000 lots in soy, and 1,000 lots in soyoil.

 

The market stripped off some more weak long positions, as harvest-related pressure and outside market weakness left futures without fresh support to underpin prices, said John Kleist, broker/analyst with Allendale Inc.

 

Weather models continued to point to a window of opportunity for harvesting in the central U.S. next week, opening the door for fresh soy supplies to move into the cash pipeline. The harvest outlooks are attracting hedge selling, with farmers and speculators looking to sell rallies, traders said.

 

The recovering U.S. dollar was a negative influence on commodities in general, adding pressure to prices as well.

 

However, there is fairly decent technical support beneath the market. Some nasty weather still to come this week for Midwest crops is expected to limit declines as month-end liquidation slows, Kleist added.

 

The DTN Meteorlogix weather forecast calls for rain and thunderstorms late in the week to bring a new round of harvest delays in central U.S. This is especially the case in the southern and eastern Midwest, where rain occurred Tuesday and more rain is likely Thursday into Friday. The Delta will also have rain and heavy thunderstorms Thursday and Friday, further delaying summer crop harvests, Meteorlogix said.

 

The six-to-10-day period through Nov. 7 offers a much better Midwest harvest scenario. Both U.S. and European forecast models indicate upper-air ridging over the western Midwest into the Canadian Prairie. "This means warmer and drier conditions and the most favorable outlook for harvest we have seen this season," Meteorlogix said in the forecast.

 

The U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT Thursday. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Oct. 22 to be in the range of 400,000 to 750,000 metric tonnes. Soymeal export sales are seen between 150,000 and 250,000 tonnes, while soyoil sales are pegged between 10,000 and 25,000 tonnes.

 

 

Soy Products

 

Soy product futures ended mixed, with soymeal disengaging itself from the defensive tonnee in the complex on adjustments in the meal/oil spread relationship. Soymeal futures rebounded from early declines on the unwinding of oil/meal spreads and technical buying associated with the December contract's ability to hold underlying chart support, analysts said.

 

Soyoil futures ended lower. They retreated for the fifth consecutive day on borrowed weakness from crude oil futures and speculative long liquidation on overbought ideas and a lack of fresh fundamental support, analysts said.

 

December oil share was 38.75%, while the November/December soy crush ended at 77 3/4 cents.