September 3, 2008
CBOT Soy Review on Tuesday: Ends down on outside pressure, weather
Chicago Board of Trade soybean futures finished lower but above session lows Tuesday on a selloff in crude oil, strength in the U.S. dollar and expectations that remnants of Hurricane Gustav will bring beneficial moisture to the Midwest.
Nearby September soybeans tumbled 30 1/2 cents to US$13.01 1/2 per bushel, while November soybeans shed 25 1/2 cents to US$12.98 1/2. December soyoil closed down 137 points at 52.83 cents per pound, and December soymeal finished down US$2.60 at US$355.40 per short tonne.
Losses in outside markets and a firm greenback weighed on the markets as commodity funds sold CBOT grains and soybeans, traders said. Funds sold an estimated 3,000 soybean contracts.
Forecasts for moisture later this week in Illinois and Missouri added to the bearish tonnee, following an August that was "very dry across the key Midwest growing regions," said Tim Hannagan, analyst for Alaron. The region from St. Louis to Chicago through southern Michigan could see up to 8 inches of rain in localized areas starting Thursday morning, according to T-storm Weather.
However, rainfall amounts are difficult to assess. Totals of 2.5 to 4.5 inches are "most probable" along Interstate 55, T-Storm said.
"Coming in today, we primarily started off pricing in what looks like the best week of rain in the drier areas of the Midwest since the first of August," Hannagan said.
Soybeans trimmed losses as crude oil came off its lows, traders said. There was some short-covering and support from projections that the U.S. Department of Agriculture will lower condition ratings in its weekly crop progress report, Hannagan said.
The crop progress report, due at 4 p.m. EDT, could lower the good-to-excellent rating for soybeans by 1 to 3 percentage points, traders said. A week ago, 61% of the crop was rated good to excellent.
In other news, protests by Argentina's truckers that began last week in Rosario have spread to ports in Buenos Aires and Bahia Blanca, according to local daily El Cronista. The strike diminished the flow of grain to the leading port complexes and could "certainly create a demand scenario" that may shift export business to the U.S., which would be bullish, Hannagan said.
CBOT soy product futures settled in negative territory on spillover weakness from outside markets. Crude oil's losses pressured the soy complex throughout the session.
Commodity funds were liquidating amid strength in the U.S. dollar, traders said. Funds sold an estimated 2,000 soyoil contracts and 1,000 soymeal contracts.