November 5, 2009

 

CBOT Soy Review on Wednesday: Falls on harvest pressure, drier weather

 

 

Expectations that the U.S. soy harvest will accelerate weighed on Chicago Board of Trade soy futures Wednesday as funds showed up to sell.

 

January soy fell 11 1/2 cents to US$9.99 per bushel. December soymeal sank US$4.80 to US$301.60 per short tonnene, and December soyoil edged up 2 points to 37.55 cents per pound.

 

Drier, sunnier weather in the central U.S. this week should allow soy combining to advance after wet weather caused serious delays, traders said. Spot soy basis weakened at the U.S. Gulf, reflecting harvest progress, an analyst said.

 

"I think there are a few beans that are flowing into the pipeline," he said.

 

Weather does not look too bad for harvest next week either, an analyst said. Some rain is expected early next week, but widespread and heavy rain is not in the forecast, according to T-Storm Weather.

 

"At least several days of dry weather follow light rain early next week," the private weather firm said.

 

Traders are following weather forecasts closely amid uncertainty about the size of the crop sitting in the fields. A production estimate issued Wednesday by private analytical firm Informa Economics was seen as "slightly bearish" because it was well above the latest government estimate, a CBOT floor analyst said.

 

Informa estimated the soy crop at 3.333 billion bushels, down from its October estimate of 3.383 billion but above the U.S. Department of Agriculture's October estimate of 3.25 billion. The firm pegged the average yield at 43.5 bushels per acre, compared with its October estimate of 44 bushels and the USDA's October estimate of 42.4 bushels.

 

The USDA is slated to update its production and yield forecasts in a report due out at 8:30 a.m. EST Tuesday. It also will update its estimates on ending stocks at the same time in a monthly supply/demand report.

 

Commodity funds sold an estimated 4,000 soy contracts.

 

 

Soy Products

 

CBOT soy product futures settled mixed, with soyoil clinging to small gains at the close of trading. Weather looks favorable for the U.S. soy harvest and bearish for the soy complex, an analyst said.

 

It seemed as though there was some unwinding of long soymeal/short soyoil spreads, he said. Commodity funds were seen as even in soyoil and sold an estimated 1,000 soymeal contracts, traders said.

 

Traders are waiting for the USDA to issue its weekly export sales report at 8:30 a.m. EST Thursday. Export sales are estimated at 450,000-700,000 tonnenes for soy, 100,000-250,000 tonnenes for soymeal and 5,000-20,000 tonnenes for soyoil.