November 1, 2008
CBOT Soy Review on Friday: Soy slips with crude as dollar gains
Chicago Board of Trade soybean futures slipped on crude oil's weakness and the U.S. dollar's strength Friday but maintained gains for the week.
An equities rally and end-of-month fund buying added support as nearby contracts lifted off their lows, a CBOT floor trader said.
Soybean volume was light, he added.
November soybean contracts shed 8 3/4 cents a bushel to close at US$9.25 1/4. The contract traded in a 20-cent range that fell as low as US$9.10. January soybeans dropped 10 cents to US$9.33. It spread a 21-cent range, which fluctuated by 14 cents in the last minute of trading. The contract bottomed at US$9.18.
Midday estimates pegged fund selling at an estimated 3,000 contracts.
December soymeal settled US$10.30 lower at US$273 per short tonne. January soymeal dropped US$10.20 at US$274.30. December soyoil finished 88 points lower at 33.60 cents per pound.
Funds sold an estimated 1,000 lots in both soymeal and soyoil, according to midday estimates.
With deliveries on first-notice day generally in line with expectations, the trader said he had expected the spread to widen Friday. Instead, it tightened to close with the January contract at 7 1/2-cent premium to the spot.
Soy futures managed to post gains for the week of 61 1/2 cents and 66 cents per bushel, respectively. But the nearby contract is still down about 12% for the month, a highly unusual monthly decline, especially for October. The most recent comparative monthly drop was in July 2004, when the trade was sure the year's crop was made, he said.
But a highly unusual economic trading environment and changes related to the switch to electronic trading are making for an unusual year, traders said.
"This is not your father's trading floor," a trader said.
The U.S. Department of Agriculture will release its weekly crop-progress report at 4 p.m. EST. The previous report estimated soybean harvest was 76% complete. Analysts and trader estimates ranged for 80-88% complete on the new report. With a warm, sunny weather forecast across the Midwest, some suggested that farmers might ignore beans and try to catch up on corn harvest, which is much further behind.
CBOT soy product futures succumbed to the pressure of weaker crude and vegetable oils, closing out Friday's trade with losses.
December oil share ended at 38.1% and the November/December crush ended at 45 1/2 cents.