August 9, 2008

 

CBOT Soy Review on Friday: Tumbles on firm dollar, weak outside markets

 

 

A rally in the U.S. dollar, weakness in outside markets and forecasts for favorable weather next week shoved Chicago Board of Trade soybean futures sharply lower Friday.

 

Most-active November soybeans dropped 58 1/2 cents to end at US$11.80 1/2 per bushel, its first close below US$12 since May 1. The contract was down US$1.84 1/2 on the week, although the price is still well above last year, when it traded at US$8.71 3/4.

 

December soymeal fell US$19.40 to US$313.30 per short tonne, while December soyoil slid 170 points to 51.50 cents per pound.

 

The strong greenback and a slide in crude oil weighed heavily on CBOT soybeans, traders said. Along with soy and crude oil, the grains and metals also were lower.

 

Favorable weather forecasts for the U.S. Midwest next week added bearish pressure, an analyst said. Traders did not want to hold long positions heading into the weekend because of expectations for rain and mild temperatures, he said.

 

The DTN Meteorlogix Midwest forecast for the next week to 10 days calls for mostly favorable crop weather to continue across the region. Near- to below-normal temperatures and near- to above-normal rainfall will maintain favorable conditions for late pollinating and filling corn and for flowering and pod-filling soybeans, the private weather firm said.

 

"Nothing looks detrimental," John Kleist, broker/analyst for Allendale, said about the weather.

 

The sharp setback in soybeans has been "long overdue" as "they did not break pound for pound relative to the corn until roughly this week or so," Kleist said. Corn and soybeans soared to lofty prices this past spring following severe flooding in the U.S. Midwest.

 

Commodity funds sold an estimated 4,000 contracts.

 

"Time finally caught up to the beans," Kleist said. "The drop in the crude oil, the rally in the U.S. dollar -- you turned the psychology hard against it."

 

Traders are looking ahead to the release of U.S. Department of Agriculture crop data due out at 8:30 a.m. EDT Thursday. The agency will issue updated estimates on U.S. soybean and corn yields, production, planted acreage and harvested acreage.

 

 

Soy Products

 

CBOT soy product futures closed sharply lower on the gains in the U.S. dollar and sell-off in outside markets. Soymeal and soyoil followed soybeans into negative territory, a trader said.

 

Tumbling crude oil prices were particularly bearish for soyoil, a trader said. Commodity funds sold an estimated 3,000 soyoil and 2,000 soymeal contracts.