November 6, 2009

 

CBOT Soy Review on Thursday: Futures tumble, lacked underpinning support

 

 

Soy futures on the Chicago Board of Trade ended lower Thursday, stumbling to the lower end of a recent trading range as speculative buyers lacked fresh support to underpin prices.

 

CBOT November soy finished 28 1/2 cents lower at US$9.67 per bushel, and January soy ended 27 cents lower at US$9.72.

 

In pit trades, speculative funds were estimated buyers of 5,000 lots in soy, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

The combination of open harvest weather for the central U.S., reports of good yields and a lack of outside market support to attract speculative buying opened the door for the market to extend losses over the course of the day.

 

Speculative profit taking from prior gains was featured. Active harvesting and bearish private analytical firm crop estimates took the fear out of the market that was built up in October, said Tim Hannagan, analyst with P.F.G. Best in Chicago.

 

October conditions were some of the most miserable crop weather in history, but now there is an open window for producers to harvest, enticing traders into extracting risk premium from prices, he added.

 

Meanwhile, a firmer U.S. dollar and a lack of bullish support from commodity markets helped sustain the losses, with routine weekly export sales another feature keeping bullish traders on the run.

 

Harvest pressure served as the catalyst for the slide, but technically inspired selling was a drawing card for fund selling to firmly plant futures in negative territory.

 

A technical analyst said January soy are presently trapped in a trading range bound by strong technical resistance at the October high of US$10.29 1/4 a bushel and by strong technical support at the last reaction low on the daily bar chart, which is located at US$9.62.

 

"The direction in which January soy break out of the current trading range is very likely to be the direction of the next significant trend in prices," he said in special segment to Dow Jones Newswires.

 

The DTN Meteorlogix weather forecast said mainly dry and very warm weather will favor Midwest harvest activity for at least the next week, possibly longer. In the Delta, drier and warmer weather will help conditions for harvesting through Sunday. However, wet weather early next week will likely slow field work again, as the rain could be even heavier if moisture associated with tropical storm Ida gets involved, Meteorlogix said.

 

 

Soy Products

 

Soy product futures ended lower, backpedaling in unison with soy. Soymeal tumble to a new low for the week, pressured by prospects of fresh availability of soy supplies for crushing, analysts said. Technical selling added to the losses, as pre-placed sell orders accelerated the decline once active contracts penetrated underlying chart support.

 

Soyoil futures ended lower with the rest of the complex. However, the market managed to gain product share value on adjustments in the meal/oil spread relationship, traders said. Nevertheless, the absence of fresh supportive news and spillover weakness from crude oil weighed on prices.

 

December soymeal ended US$10.30 lower at US$291.20 per short tonne, and December soyoil finished 37 points lower at 37.18 cents per pound.

 

December oil share was 38.91%, while the November/December soy crush ended at 82 3/4 cents.