October 31, 2008
CBOT Soy Review on Thursday: Crude oil drives soy down, products gain
Weaker crude oil pressured Chicago Board of Trade soybean futures to settle lower Thursday, while soy products eked out gains.
Traders noted soybeans were more resilient than neighboring markets as concerns about tight supply offer support.
The November soybean contract shed 3 1/4 cents a bushel to close at US$9.34. The contract traded a 44-cent range that fell as low as US$9.20. January soybeans dropped 4 cents to US$9.43. It traded in a 46 1/2-cent range, bottoming at US$9.27 1/2.
Funds sold an estimated 3,000 contracts.
December soymeal settled 30 cents higher at US$283.30 per short tonne. December soyoil finished 15 points higher at 34.45 cents per pound.
Speculative funds was termed even in soymeal. The funds sold an estimated 1,000 lots in soyoil.
The factors influencing soybeans are "multi-faceted," said Don Roose, president of U.S. Commodities.
"I think it comes from crude oil leading us around - its down sharply today," Roose said.
Also, lower prices inspired greater export demand, but "my feeling is that will wane," he adds, noting selective buyers are buying on the breaks and purchases will ease as prices rise.
Export sales commitments for the week ending Oct. 23 totaled 1.457 million metric tonnes, according to data released Thursday by the U.S. Department of Agriculture. Sales were much higher than analysts 800,000- to 1 million-tonne guesses.
Ahead of Fridays first notice day for the November soybean contract, analysts and traders are anticipating light deliveries, generally predicting less than 500 lots to be released.
"Farmers sold a little on [Wednesdays] rally and filled the [immediate order] pipeline, but if demand picks back up the boards going to have to rally to bring the beans from the farmer," a CBOT floor trader said.
As U.S. farmers wind up their harvest, Brazils farmers prepare to plant.
"With planting season for soybeans ramping up in the coming month or two, [Brazils] current dryness is somewhat concerning," according to Cropcast Agricultural Weather. "It looks like the concern for many areas may be short-lived, however, as conditions have slowly turned wetter of late and much wetter weather is anticipated during the next couple of weeks."
If modeling is correct, "there should be little, if any, lingering concern for germination and establishment of soybeans from Mato Grosso to Parana, where much of the soybean belt calls home," Cropcast said. "The area still likely to remain dry is in the northeast, but this area makes up only about 10% of the national crop"
Soy-product futures managed some gains Thursday.
December oil share ended at 37.04% and the November/December crush ended at 69 1/2 cents.