December 6, 2008
CBOT Soy Review on Friday: Tumble; new lows on economic woes
A worsening global economic situation uncovered speculative selling to push Chicago Board of Trade soybean futures to new contract lows Friday.
CBOT January soybeans finished 27 1/2 cents lower at US$8.11.
January soymeal settled US$7.20 lower at US$238.30 per short tonne. January soyoil finished 95 points lower at 28.55 cents per pound.
The losses were tied to economic woes with technical pressure associated with nearby prices falling below the psychological US$8.00 per bushel level, helping accelerate selling, said Jerry Gidel, analyst with North America Risk Management Services.
Outside market weakness kept buyers in a cautious mode, easing the markets' descent to their lowest levels since May 2007. Soybeans lacked fresh supportive news to offset the bearish tonnee, with early losses in equities and crude oil serving as a dominant feature.
A grim U.S. jobs report released Friday was the latest economic news highlighting the distressed state of the U.S. economy.
The combination of outside weakness, improved planting conditions in Argentina and demand concerns served as the prescription for the declines, said Vic Lespinasse, analyst with Grainsanalyst.com.
However, futures did manage to trim losses down the stretch on a late bounce in the stock market and end-of-the-week position evening, Lespinasse added.
Argentina's soybean planting benefited from rainfall last weekend, which allowed farmers to push forward in getting seeds into soil, the Agriculture Secretariat said in its weekly crop report Friday. As of Thursday, Argentine farmers had planted 55% of the area seen going to soy, up from 52% at this point last year, the secretariat said.
The DTN Meteorlogix forecast for South America crop areas features rainfall of up to one-and-one-half inches in central Argentina during Tuesday and Wednesday of this next week, and similar rainfall in southern Brazil Wednesday and Thursday. This is timely moisture for the region - especially in Rio Grande do Sul province of southern Brazil, where stress to soybean development has occurred due to dry conditions.
In pit trades, speculative fund selling was estimated at 3,000 lots.
Soy products retreated in unison with soybeans, succumbing to speculative selling pressure. Global economic slowdowns continued to spark demand destruction fears, keeping buyers in a cautious mode. Soyoil was pressured by crude oil, but did manage to regain some product share on the unwinding of some meal/oil spreads, traders said.
January oil share ended at 37.82% and the January crush ended at 54 3/4 cents.