October 31, 2009

 

CBOT Soy Review on Friday: Market falls as drier weather will allow harvest

 

 

Soybean futures on the Chicago Board of Trade fell Friday on expectations that drier Midwest weather next month will allow farmers to catch up on delayed harvesting.

 

November soybean futures fell 7 1/2 cents to US$9.78 per bushel. For the week, the November contract is down 28 cents, or 2.8%. January futures fell 10 1/2 cents on the day to US$9.76 1/2.

 

Midwest farmers will return to their fields in force next week as unusually rainy weather dissipates, analysts said. While farmers are expected to reap a record crop, wet conditions this month have kept harvest progress at barely more than half the average pace.

 

"Next week looks much more tranquil than this week" in the Midwest, said Dan Leonard, a meteorologist with WSI AgTrader in Andover, Maryland.

 

"Once this current system moves out tomorrow, the next seven to 10 days thereafter look generally cool and dry," Leonard said. "The extended period of dry weather next week will make for improved field conditions and an increase in harvest progress."

 

Soggy fields are impeding the flow of fresh soybeans to processors, exacerbating concern over already-tight stockpiles, CBOT traders said.

 

As of Oct. 25, 44% of the nation's soybean crop was harvested, up from 30% the previous week but below the five-year average of 80%, according to the U.S. Department of Agriculture.

 

"The question is yield," Jim Smitherman, president of Harvest Trading. "The farmers who can get in the field say the yield is still good. We may be way behind and it's wet, but the crop is still there."

 

Soybean harvest progress, in percentage terms, will probably be in the "low 60s" by Sunday, estimated David Smoldt, vice president of operations for FCStone, LLC. The five-year average for that time of year is about 85%, he said.

 

Weakness in oil prices and strength in the U.S. dollar also weighed on soybean futures, traders said. A stronger dollar makes U.S. products more expensive to foreign buyers, potentially crimping exports.

 

CBOT soymeal futures ended mixed, with nearby contracts gaining on spreading activity against soybean oil.

 

Soymeal also gained support from news that the European Commission approved three varieties of genetically modified corn for import and consumption in the European Union. Like corn, meal is fed to livestock. Soyoil was pressured by weakness in crude oil prices, traders said.

 

December soymeal rose US$1.70 to US$297.00 per tonne and December soyoil fell 1.12 cents to 36.40 cents per pound.