November 20, 2008
CBOT Soy Review on Wednesday: Lower; succumbs to outside pressure
Soybean futures on the Chicago Board of Trade ended lower Wednesday, succumbing to weakness from outside markets, but remained pinned within a six-week trading range.
CBOT January soybeans finished 5 cents lower at US$8.97.
January soymeal settled US$0.40 higher at US$269.60 per short tonne. January soyoil finished 31 points lower at 32.35 cents per pound.
Spillover from outside markets, with the Dow Jones Industrial Average down more than 200 points and crude oil futures retreating as grain futures neared their close, pressured futures down the stretch, analysts said.
A quiet news front failed to provide any clear directives, leaving futures to linger within their sideways trading range of the past few weeks.
The market held on pretty well considering the losses in the stock market, said Jack Scoville, analyst with Price Futures Group in Chicago.
The market garnered support from dryness issues that could impact production potential in Argentina and southern Brazil, and with demand holding on and firm cash basis levels, downside risks were limited.
The market's supportive features are allowing futures to attempt to decouple from outside market influences, but traders continue to take a cautious approach, with macro economic fears limiting buying interest, Scoville added.
The DTN Meteorlogix weather forecast said some dryness is developing in Brazil's western Rio Grande do Sul province, the third-largest soybean state. This drier trend bears watching. It has already forced some delays in soybean planting.
A significant dry-weather trend in Argentina shows no sign of easing. The outlook is for mainly dry and warm to hot conditions during the next 10 days. The early soybean crop may also come under increasing stress during this period, Meteotrlogix said.
On tap for Thursday, the U.S. Department of Agriculture will release its weekly export sales report at 8:30 a.m. EST (1330 GMT). Analysts forecast soybean sales in a range of 450,000-to-550,000 metric tonnes. Soymeal sales are seen in a range of 75,000 to 130,000 tonnes, and soyoil sales are expected in a range of zero to 10,000 tonnes.
Soy product futures ended mixed, with soyoil falling on weakness from crude oil futures. Meal/oil spreading added to the mixed tonnee in an overall quiet session. Reports of lower protein in the 2008 soy crop and increased oil content added to traders' mental attitude of buying meal and selling oil, a CBOT floor analyst said.
January oil share ended at 37.39% and the January crush ended at 52 cents.