September 12, 2008


CBOT Soy Review on Thursday: Traders eye Friday's USDA report



Chicago Board of Trade soybean futures closed slightly lower Thursday amid spillover pressure from outside markets and positioning ahead of government crop reports.


November soybeans slipped 2 cents to US$11.76 a bushel. December soymeal jumped US$4.40 to US$330.20 per short tonne, while December soyoil fell 70 points to 47.62 cents per pound.


Trading was choppy and thin, with short-covering carrying the market higher at times during the day, an analyst said. Traders were squaring positions amid ideas the U.S. Department of Agriculture will trim its estimate for U.S. soybean production following dry August weather, he said.


The average of analysts' estimates for 2008-09 U.S. soybean production is 2.950 billion bushels, with a yield of 40.2 bushels per acre, according to a Dow Jones Newswires survey of 21 analysts. In August, USDA projected a crop size of 2.973 billion bushels, using a yield of 40.5 bushels an acre.


"It's more of a book balancing, a posturing ahead of tomorrow's report," said Tim Hannagan, analyst for Alaron.


Traders were keeping an eye on Hurricane Ike and its potential to impact crude oil, Hannagan said. Weakness in energies was bearish for soybeans, a trader said. Crude oil prices are linked to the CBOT soy complex because biodiesel is made from soyoil.


Ike is expected landfall Saturday morning along the Texas coast. Disruptions to oil or natural gas operations could send energy and soy prices higher, an analyst said.


Traders also continue to keep an eye on weather forecasts, as a frost could damage the crop. Widespread and heavy rain is probable across portions of the central U.S. through Saturday, with too much rain centered on Missouri, T-Storm Weather said in an update to its daily forecast.


A dramatic warm-up doesn't immediately follow, with temperatures expected to average near to slightly cooler than usual late next week, T-Storm said. However, "the first frost is not immediately foreseen," the private weather firm said.



Soy Products


CBOT soy product futures closed mixed, as traders bought soymeal and sold soyoil in spreads. Commodity fund buying of an estimated 1,000 soymeal contracts boosted the market, while funds sold an estimated 1,000 soyoil contracts, traders said.


The meal/oil spread is "good" to do at this time of the year, as feeders need to buy meal heading into late September for winter feed rations, an analyst said.


"The feeders are going to need to load up on meal," he said.


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