September 1, 2009

 

CBOT Soy Review on Monday: Market down on outside influence, benign weather

 

 

Chicago Board of Trade soy futures ended sharply lower Monday, tumbling on bearish outside economic influences and near-term weather that's favorable for crop development.

 

The CBOT September contract settled 35 3/4 cents lower at US$11.00 per bushel, and November soy finished 31 1/2 cents lower at US$9.79 1/2 per bushel. In pit trades, speculative fund selling was estimated at 5,000 lots in soy, 1,000 lots in soymeal, and 2,000 lots in soyoil.

 

September soymeal settled US$4.50 lower at US$382.50 per short tonne, and December soymeal ended US$11.00 lower at US$297.50. December soyoil finished 109 points lower at 35.60 cents per pound. An overnight tumble in Chinese equity markets, fears of China subsidizing sales of its soy reserves and benign near-term U.S. Midwest weather sent bearish ripples through the market, said Victor Lespinasse, analyst with Grainsanalyst.com.

 

Traders trimmed risk premiums from prices on the lack of a weather threat, and with economic uncertainty, speculative traders were more than willing to trim risk exposure.

 

Weakness in crude oil futures and U.S. equities added to the defensive tonnee. However, downward pressure was initially set by China worries, as the market is very sensitive to the Chinese economy because it drives world commodity demand, analysts said.

 

Otherwise, the market had few fresh directives, but a warmer, drier weather forecast takes some frost worries from the market, raising the potential for a possible record U.S. crop in 2009.

 

The DTN Meteorlogix Weather forecast for this week calls for an improvement in temperatures for the Midwest. Steadily warming temperatures are in store across the region during the rest of this week through the 10-day period. The six- to 10-day temperature outlook is for normal to above-normal values in the Midwest. This milder trend will promote crop progress and will keep a cold-weather threat out of the picture through the first 10 days of September, Meteorlogix said.

 

The U.S. Department of Agriculture is scheduled to release its weekly crop progress report Monday, 4 p.m. EDT. Analysts expect conditions ratings to fall in a range of steady to down 1 percentage point.

 

 

Soy Products

 

Soy product futures stumbled in unison with sharp declines in soy Monday. Soymeal was pressured by weakness from soy, with traders eyeing improved weather from new crop soy production and fears of subsidized sales of Chinese reserves weighing on the market, analysts said.

 

Soyoil prices dropped in step with the rest of the complex, but sharp declines in crude oil futures was a key influence pinning prices in negative territory, analysts said.

 

December oil share was 37.4%, while the November/December soy crush ended at 66 1/2 cents.