July 15, 2008

 

CBOT Soy Review on Monday: Prices tumble; weather premium trimmed

 

 

Chicago Board of Trade soybean futures tumbled Monday, erasing risk premium as Midwest weather outlooks are seen promoting crop development.

 

August soybeans settled 33 1/2 cents lower at USUS$15.82 and November soybeans ended 37 cents lower at USUS$15.59. The spot month July futures quietly expired 35 1/2 cents lower at USUS$15.95.

 

December soymeal settled USUS$12.90 lower at USUS$415.20 per short tonne. December soyoil finished 82 points lower at 65.20 cents per pound.

 

"The price weakness was all weather related," said Brian Hoops, president Midwest Market Solutions in Yanktonne, South Dakota.

 

Weather models on Friday pointed toward a heat ridge forming in the Midwest, but the models on Sunday took the heat away, calling for seasonal temperatures with above normal precipitation in 6 to 10-day outlooks.

 

The market effectively extracted some risk premium, as near term weather seems ideal for developing soybean crops, said Hoops.

 

Outside markets provided mixed signals, with a midday bounce in crude oil futures lending support, but not enough to overcome the dominant influence of weather, analysts added.

 

Technical selling played a role in the market's slide as well, with the most active November future hovering around its 20-day moving average for most of the day.

 

The DTN Meteorlogix weather forecast calls for temperatures to be in the range of 85-92 Fahrenheit over the Midwest east of Interstate 35 (central Iowa). This round of heat, on the heels of the widespread rain last week and weekend, means a favorable weather pattern for corn pollination and soybean blooming.

 

During the past weekend, rainfall of two to five inches covered the central Corn Belt - from eastern Iowa to central Indiana. This rainfall is a timely boost for soil moisture as corn and soybeans move into their reproductive stages this growing season, Meteorlogix reports.

 

Meanwhile, analysts expect crops rated good to excellent conditions are expected to rise by 1 to 3 percentage points, with percentage of crops blooming seen rising to 25%.

 

Soybeans love sunshine, and the Midwest has had its share lately, and that should have boosted the crops' blooming percentage, said Hoops. U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EDT.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended lower, consolidating off Friday's gains. The products moved in unison with the slide in soybeans as benign Midwest weather conditions improved soybean yield potential. Speculative selling was featured.

 

December oil share ended at 43.98% and the November/December crush ended at 71 1/2 cents.

 

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

 

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

 

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