November 13, 2007

 

CBOT Soy Review on Monday: Slides on outside market pressure

 

 

Chicago Board of Trade soybean futures closed lower Monday under pressure from weakness in outside markets like crude oil and gold, traders and analysts said.

 

November soybeans finished down 10 1/4 cents at US$10.32 3/4 per bushel, and January soybeans fell 9 3/4 cents to 10.46 1/4. December soymeal dropped US$1.70 to US$280.10 per short tonne, and December soyoil settled down 62 points at 44.46 cents per pound.

 

The soy complex has followed the energies and precious metals higher in recent rallies, and on Monday followed the outside markets down, said Dale Durchholz, analyst with AgriVisor.

 

"Everybody's really been watching them for day-to-day leadership," Durchholz said about the outside markets.

 

There was room for profit-taking after recent gains, floor traders said. End users also don't want to chase the market higher, unless they see a need to get aggressive, Durchholz added.

 

Harvest of corn and soybeans progressed over the weekend, thanks to mostly dry, mild weather across the U.S. corn belt and Delta, DTN Meteorlogix said. The progress was seen as bearish, a trader said, and dry, relatively warm conditions are expected to remain in place for this week and through the weekend.

 

South America weather also is "generally getting a little bit better after having a little bit of concern early on," Durchholz said.

 

In Brazil, the west-central state of Mato Grosso had rainfall of up to 2.5 inches during the weekend, which was beneficial for soybean planting, emergence and development, DTN Meteorlogix said. Additional rain of up to 1.5 inches is forecast for northern Brazil Wednesday and Thursday, the private weather firm said.

 

Heavy rain in the southern Brazilian states of Rio Grande do Sul and Parana was less welcome, Meteorlogix said. The moisture caused delays in soybean planting and may force replanting of some soybean fields, the firm said.

 

The U.S. will produce a smaller soybean crop this year than last year as acres were switched to corn, so South American production is taking on an added importance. If South America sees adverse weather problems during its growing season in the coming months, soybean prices could hit the US$11-US$12 level, said Thomas Mielke, editor in chief of Oil World, an influential publication based in Hamburg, Germany. Mielke spoke at the Soya and Oilseed Summit in Chicago.

 

 

SOY PRODUCT

 

Weakness in crude oil and precious metals pressured the soy products, traders said. The markets pulled back after recent rallies, he added.

 

Commodity funds sold an estimated 3,000 soyoil contracts and 1,000 soymeal contracts. In soyoil pit trades, Goldenberg Hehmeyer sold 700 January. In soymeal pit trades, JP Morgan bought 300 December and Tenco sold 300 December.

 

Soyoil cash and futures prices are in a very bullish situation amid tightening global oilseed stocks, Mielke said. Soyoil prices are at their highest levels in 33 years and still have potential, if South America has any weather or crop threats, he said.

 

However, soyoil prices may not be for from a peak and could see a decline in the medium-term, Mielke cautioned. He projected world vegoils consumption will increase by 8%-9% this marketing year.