November 7, 2009

 

CBOT Soy Review on Friday: Lower; beans set one-month lows on harvest

 

 

Soy futures at the Chicago Board of Trade dropped to one-month lows Friday, continuing to extract risk premium from prices in the face of harvest pressure.

 

CBOT November soy finished 19 cents lower at US$9.48 per bushel, and January soy ended 17 cents lower at US$9.55.

 

In pit trades, speculative funds were estimated buyers of 4,000 lots in soy, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

A good open window for harvest progress across the corn belt pressured futures again, as fresh farmer sales kept futures pinned in negative territory, said Bill Nelson, analyst with Doane Advisory Service in St. Louis.

 

Bearish economic influences added to the defensive tonnee, as a 10.2% U.S. unemployment rate in October raised fears of weakening domestic demand. "Demand is not the greatest for meat and that means feed like soymeal in a poor economic climate," said Mike Zuzolo, president of Global Commodity Analytics.

 

Technically inspired selling was featured as well, with declines accelerating once most active contracts penetrated underlying chart support. Bearish outlooks for next week's crop report, with many analysts optimistic about increased yield and output forecasts, added to the defensive tonnee.

 

Nevertheless, the market's key objective was the continued extraction of premium put in the market due to poor October weather, Zuzolo said. Good harvest weather takes the fear of further harvest delays and field losses out of the market, sending prices back to levels seen at the October crop report, he added.

 

Most analysts surveyed anticipate a modest increase in Tuesday's U.S. Department of Agriculture 2009 soy crop production estimate. On average, 24 analysts participating in a Dow Jones Newswires survey projected a crop size of 3.269 billion bushels with a yield of 42.7 bushels per acre. The averages ranged from 3.187 billion to 3.379 billion bushels for production and 41.6 to 44.1 bushels an acre for yields.

 

The DTN Meteorlogix weather forecast calls for a dry and open harvest weather pattern during the weekend in the Midwest. Mainly dry and very warm weather will favor harvesting for at least the next week, possibly longer.

 

In the Delta, it does not appear likely that moisture associated with Tropical Depression Ida will reach into this region early next week, which is more promising for harvest conditions. In Brazil's soy belt, increasing thunderstorm activity begins in the south and spreads into the north during the weekend. These showers will maintain favorable soil moisture for early crops, but could again slow fieldwork and planting, Meteorlogix said.

 

 

Soy Products

 

Soy product futures stumbled in unison with soy futures.

 

Soymeal was pressured by the potential for increased soy availability for crushing. Additional weakness was generated from economic woes and worries a bearish economic climate could lead to reduced domestic feed demand, analysts said.

 

Soyoil futures declined in step with the rest of the complex, garnering pressure from an over 2% drop in crude oil futures.

 

December soymeal ended US$2.50 lower at US$288.80 per short tonne, and December soyoil finished 41 points lower at 36.77 cents per pound.

 

December oil share was 38.84%, while the November/December soy crush ended at 92 cents.