August 5, 2008

 

CBOT Soy Review on Monday: Limit down; speculative liquidation, weather

 

 

Chicago Board of Trade soybean futures tumbled once again Monday, dropping their exchange-imposed daily trading limits on broad-based speculative liquidation, favorable crop weather outlooks and outside market influences.

 

August soybeans settled 70 3/4 cents lower at US$12.87 and November soybeans ended 70 cents lower at US$12.95.

 

December soymeal settled US$20.00 lower at US$346.00 per short tonne. December soyoil finished 250 points higher at 55.31 cents per pound.

 

"The market had all the right ingredients to press prices, with crude oil torpedoing lower, non-threatening weather and an absence of end user buying," said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Weather looks favorable for Midwest crops during the next two weeks, and that is sparking ideas the U.S. soy crop is getting bigger, not smaller, Roose added.

 

Widespread liquidation across commodities was the key factor in the market, as the weather forecast and crop outlooks are the same as last week, a cash-connected CBOT broker said.

 

Crude oil prices at the New York Mercantile Exchange were down sharply. Nymex copper prices were down heavily, precious metals prices were weaker and Asian soy and vegoil markets stumbled overnight as well.

 

Pressure from bearish technical-chart formations helped accelerate the market's slide, with the ability of active contracts to gap below a recent sideways trading range and penetrate support at the psychological US$13.00-per- bushel level uncovering pre-placed sell orders.

 

Traders anticipate the defensive tonnee will carry over into the overnight session, with floor brokers saying November soybeans were synthetically trading at US$12.75 bushel in the options pit at the close.

 

The U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EDT. Analysts surveyed by Dow Jones Newswires anticipate U.S. soybean crop ratings to hold steady or decline by 2 percentage points in the good-to-excellent-condition category.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 4,000 lots.

 

CBOT soybean and soy product daily trading limits will expand Tuesday by virtue of their limit-down close. Soybean daily limits will expand to US$1.05 a bushel, up from 70 cents. Soymeal limits will climb to US$30.00 per short tonne, up from US$20.00, and soyoil daily price limits will expand to 350 points from their normal 250 points.

 

 

SOY PRODUCTS

 

Soy-product futures tumbled in unison with soybeans, dropping to their lower daily trading limits on fund liquidation seen across commodities in general, analysts said. Weakness in Asian soy and vegoil markets overnight added to the defensive theme in soyoil. Active soymeal futures dropped to two-month lows, while active soyoil contracts sank to four-month lows. Technical selling was featured as well, with the ability of the December soyoil contract to gap below its 200-day moving average attracting selling pressure.

 

December oil share ended at 44.42%, and the November/December crush ended at 74 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 4,000 lots.