August 2, 2008

 

CBOT Soy Review on Friday: Tumbles; speculatives liquidate on weather

 

 

Chicago Board of Trade soybean futures tumbled Friday, succumbing to long liquidation as the trade extracted premium on bearish weather forecasts for next week.

 

August soybeans settled 38 cents lower at US$13.57 3/4 and November soybeans ended 39 cents lower at US$13.65.

 

December soymeal settled US$9.50 lower at US$366.00 per short tonne. December soyoil finished 169 points higher at 57.81 cents per pound.

 

Cooler and wetter conditions are on tap for Midwest crops after a brief hot spell, and that served as the catalyst to weigh on prices, as traders gain confidence that yield potential is improving, analysts said.

 

Weather remains the dominant influence on prices, and with threats to the crop reduced by cool, wet forecasts, bullish traders had little to hang their hats on, a CBOT floor broker said. Soybean crops are headed into their critical pod-filling month of August, and favorable weather will go a long way in improving crop outlooks, he added.

 

The Midwest is in store for a dramatic drop in temperatures by the middle of next week, Cropcast Weather Services forecasts. Over a period of only a few days, temperatures will fall by 15 to 20 degrees Fahrenheit, down from readings breaking 100 Fahrenheit for a day or two in the southwestern corner of the corn-belt. While this cooling may be a bit overstated, it suggests that there will not be any follow-up heat events during the first half of the month, Cropcast said.

 

A firmer U.S. dollar contributed to the market's weakness, with technical pressure from the ability of active contracts to eclipse near-term support opening the door for sharp declines, traders said.

 

Despite the session's volatile break, prices remained confined within a recent sideways trading range on technical charts. The uncertainty of yields and acreage coupled with a tight balance sheet table continues to limit downside risks, analysts said.

 

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 plunged lower, influenced by better soybean crop prospects as weather remains favorable for development. Technical and speculative liquidation was featured as the market trimmed length, with soyoil able to withstand spillover support from crude oil futures.

 

December oil share ended at 44.13% and the November/December crush ended at 76 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, 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 3,000 lots.

 

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