July 18, 2008

 

CBOT Soy Review on Wednesday: Plunge; bearish influences attract speculative sales

 

 

Chicago Board of Trade soybean futures plunged Thursday, succumbing to speculative sales on a combination of bearish market influences.

 

August soybeans settled 52 cents lower at US$15.21 and November soybeans ended 50 cents lower at US$14.98.

 

December soymeal settled US$19.80 lower at US$389.90 per short tonne. December soyoil finished 66 points lower at 64.88 cents per pound.

 

A plethora of negative market factors weighed on the market. The Argentine senate voting down an export tax, no near term weather threats, a crude oil price slide, and bad economic outlooks served as the catalyst for the losses, said Jack Scoville, analyst with Price Futures Group.

 

None presented a positive vibe for buyers, analysts said.

 

Lackluster weekly export sales and a slower crush pace reported earlier in the week raised concerns that high prices were rationing demand and added to the lower tonnee, analysts added.

 

The market continues to maintain an overall bullish long-range outlook in relation to supply and demand, but with prices near record highs, buyers need fresh support to stay enthused, traders said. Looking ahead, the market is expected to stay in a volatile state, with weather forecasts the key element shaping price direction until a clear picture of yields are established in the fall, traders added.

 

The DTN Meteorlogix weather forecast said the next several days feature a high probability for rain in a dry pocket of the Corn Belt - the Upper Midwest. Rainfall of up to 2.5 inches is seen for the eastern Dakotas, Minnesota, northern Iowa, and Wisconsin. This moisture will maintain favorable growing conditions for corn and soybeans well into next week, Meteorlogix said.

 

The mid-south, from the Missouri Bootheel south through the Delta however, is in a trend of dry and very warm to hot weather. During the next week, this sector of the central U.S. has the greatest chance to have the hottest temperatures, with daytime highs approaching the upper 90s Fahrenheit, Meteorlogix added.

 

Meanwhile, despite an Argentine government campaign to reduce the proportion of farmland going to soybeans through higher export taxes on the crop, an ongoing conflict between farmers and the government will actually spur a sharp rise in soy-planted area next season, according to sector players and analysts.

 

Farmers are expected to make planting decisions within the next 50 days, and seed sales are showing a shift to soy, said Rodolfo Rossi, the president of the Argentine soy chamber.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 5,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended sharply lower, tumbling in unison with soybeans. A drop in crude oil prices weighed on soyoil, with soymeal influenced by the Argentine vote that improves chances for Argentina to return as a player in the world export market, analysts said. Argentina is a major exporter of soymeal and soyoil. Soymeal was also pressured by technical selling, with declines accelerating once futures eclipsed recent lows, traders said.

 

December oil share ended at 45.42% and the November/December crush ended at 73 1/2 cents.

 

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