August 27, 2008


CBOT Soy Review on Tuesday: Lower, speculative sales, dollar strength weighs



Chicago Board of Trade soybean futures ended lower Tuesday, backpedaling on speculative sales associated with a firm U.S. dollar and ideas prior gains were overdone.


September soybeans settled 1 3/4 cents lower at US$13.37 1/2 and November soybeans ended 2 1/2 cents lower at US$13.44 1/2.


December soymeal settled US$1.40 lower at US$367.20 per short tonne. December soyoil finished 65 points lower at 54.60 cents per pound.


The market lacked fresh stimulus to continue Monday's upward theme and traders began to take profits on ideas dry weather conditions were factored into the market and a firm U.S. dollar could temper export demand, analysts said.


However, futures retraced most of their losses over the course of the day, rebounding on a bounce in crude oil futures and the market's reluctance to give up weather premium, said John Kleist, broker/analyst with Allendale Inc.


"We are still in a weather market, and as a long as there is one last chance to destruct the crop, losses will remain limited," Kleist added.


Otherwise, futures consolidated within a recent wide range, with crop uncertainties and threat of yield losses if normal or an early frost occurs kept a floor beneath the market, while demand rationing and outside influences provide near-term overhead resistance, analysts added


Meanwhile, DTN Meteorlogix weather forecast said dry conditions in the Midwest are stressful for filling soybeans, but the western Midwest will probably see up to a half-inch of rain Wednesday and Thursday. It will turn dryer again after that, but southern Wisconsin and northern Illinois will get some showers Thursday or Thursday night.


The eastern Midwest, mostly Ohio, may benefit from rain coming north from the remnants of Tropical Storm Fay. Temperatures in the central U.S. have been cool, but the next 10 days will be warmer. Filling soybeans need rain in that 10-day time frame, Meteorlogix added.


In pit trades, speculative fund selling was estimated at 3,000 contracts.





Soy product futures ended mixed, with soymeal rebounding from earlier losses and gaining product share on spreads. Soyoil futures ended lower, succumbing to the weakness in soybeans, with overnight declines in Asian vegoil markets aiding the lower theme, traders said. However, a recovery in crude oil prices supplied enough support to limit downside pressure, traders added.


December oil share ended at 42.64% and the November/December crush ended at 65 1/2 cents.


Speculative fund selling was estimated at 2,000 lots in soyoil.


Video >

Follow Us