June 20, 2000

 

CBOT Soy Review on Thursday: Corrects on broad based sales, midwest weather

 

 

Chicago Board of Trade soybean futures ended lower Thursday, staging a correction on broad based commodity selling and favorable weather outlooks for late soybean plantings.

 

July soybeans settled 10 1/2 cents lower at US$15.45 1/2 and November soybeans ended 21 1/2 cents lower at US$15.21 1/2. July soymeal settled US$2.40 lower at US$419.50 per short tonne. July soyoil finished 134 points lower at 64.12 cents per pound.

 

Overbought market conditions left futures overdue for a modest correction, with sharp losses in crude oil futures and Midwest weather enticing traders to trim some length from the market, said John Kleist, broker/analyst with Allendale Inc.

 

The drying of Midwest fields implies soybean planting and replanting can move along, Kleist added.

 

Tumbling crude oil futures in conjunction with a firmer U.S. dollar sent negative waves filtering through commodities in general, enticing traders to liquidate long trading positions, analysts said.

 

The extraction of the weather premium was featured, with old crop futures gaining pressure on sporadic ideas that Argentina will soon resolve its farmers strike and news of a large old crop export sale cancelation from China, traders added.

 

The China cancelation gives a sign that either Argentina will come back online soon or China is starting to ration demand, said Kleist. The U.S. Department of Agriculture reported 2007-08 weekly export sales at 171,000 metric tonnes, and next week's sales are already faced with a large cancelation to overcome, Kleist added.

 

U.S. private exporters sold 2.24 million metric tonnes of soybeans for delivery to China in the 2008-09 marketing year, the USDA says. In the same announcement, USDA also says export sales of 463,500 tonnes to China for the 2007-08 marketing year were canceled.

 

Meanwhile, water is slowly receding from the corn and soybean fields of the Midwest as rain has stopped falling or activity is very light and scattered, DTN Meteorlogix said in a forecast. Rainfall of a quarter inch to an inch is possible Thursday night in central and southeast Nebraska and in northwest and central Missouri. Friday and into the weekend is expected to be mostly dry with only light, scattered showers, Meteorlogix added.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 2,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mostly lower, succumbing to broad based commodity selling. Soymeal futures ended mixed, with nearby contracts managing to rebound from early losses to post new contract highs down the stretch. General selling in commodities attracted early profit taking pressure - nearby futures managed to gain against deferred contracts on underlying demand and reports of a commercial firm buying back deliverable receipts, a CBOT floor broker said.

 

Soyoil futures ended sharply lower, tumbling on spillover weakness from crude oil futures, technical selling, meal/oil spread and a lack of fresh supportive news to underpin prices, analysts said.

 

July oil share ended at 43.32% and the July crush ended at 82 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 1,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 2,000 lots. Commercial buying was estimated at 1,000 lots.