August 6, 2008
CBOT Soy Review on Tuesday: Extends retreat; negative influences weigh
Chicago Board of Trade soybean futures stumbled once again Tuesday, retreating despite a midday technical bounce, with bearish weather and outside influences weighing on prices.
August soybeans settled 24 1/2 cents lower at US$12.62 1/2 and November soybeans ended 26 cents lower at US$12.69.
December soymeal settled US$6.50 lower at US$339.50 per short tonne. December soyoil finished 116 points higher at 54.15 cents per pound.
Futures continued to digest a plethora of negative pulls on the market, with beneficial weather from developing crops, weakness in outside inflationary markets and an overnight slide in Asian prices keeping sellers in control of direction, traders said.
Fund liquidation across global commodity markets remained a feature, but futures managed to bounce after finding technical support, with end user and bargain hunting surfacing to briefly lift prices, traders added.
Soybeans "got beat up pretty bad recently and people wanted to buy the lows, particularly with the unknowns of crop yields, production and acreage still looming ahead of next week's August crop report," said Jack Scoville, Price Futures Group analyst.
However, as the session unfolded, the absence of follow-through buying opened the door for selling to return, as traders continue to factor in improved yield potential amid a lack of crop threatening weather in the Midwest.
The DTN Meteorlogix weather forecast said showers and cooler temperatures in northern and eastern areas of the Midwest are beneficial for the development of soybean crops. The rain is boosting soil-moisture levels, and the temperatures are a welcome break from recent heat. The showers stretch from eastern Iowa through central Illinois and Indiana into Ohio and are moving southward.
Temperatures in the central U.S. are in the normal to below-normal range. The South is within a couple degrees of normal. A band from the Southwest through the southern Midwest and on to the East Coast is several degrees below normal, and the Great Lakes region, including Minnesota and eastern South Dakota, are about 5 degrees below normal, Meteorlogix said.
Private analytical firm Informa Economics on Tuesday estimated the 2008-09 soybean yield at 42 bushels per acre, up from U.S. Department of Agriculture estimate of 41.6 bushels. Total soybean production is projected at 3.054 billion bushels, up from the government's July estimate of 3 billion.
CBOT soybean and soy product daily trading limits will revert back to their normal trading limits Wednesday. Soybean daily limits will be 70 cents a bushel. Soymeal limits will drop back US$20.00 a short tonne, and Soyoil daily price limits will retreat to 250 points.
Soy product futures ended lower, falling prey to speculative selling. Spillover pressure from soybeans served as the catalyst for the declines, with soyoil also influenced by borrowed weakness from crude oil, and Asian vegoils amid talk of a build up in world supplies, analysts said. Soyoil futures carved out new four-month lows on the break and soymeal slipped to a two-month low.
December oil share ended at 44.37% and the November/December crush ended at 73 1/2 cents.