September 17, 2008


CBOT Soy Review on Tuesday: Slide; financial woes extend liquidation



Speculative long liquidation associated with shaky financial markets pressured Chicago Board of Trade soybean futures to sharply lower levels Tuesday.


November soybeans ended 55 cents lower at US$11.24.


December soymeal settled US$16.30 lower at US$319.50 per short tonne. December soyoil finished 249 points lower at 44.07 cents per pound.


"The market is in an environment where outside financial markets have forced traders to briefly chuck supportive underlying fundamentals out the window," said Greg Wagner, analyst with AgResource Company.


"Wealth destruction in equities, real estate and hard assets in the U.S. and to a lesser extent around the world, has forced investors to pull money out of the marketplace," Wagneradded.


A plunge in crude oil futures and a stronger dollar remained key drivers of direction. Fundamentally, the market was also pressured by a lack of crop deterioration in Monday's weekly crop-progress ratings, with the absence of a near-term frost threat to late maturing crops adding to the defensive tonnee, analysts said.


The uncertainties of 2008 yields amidst tight inventories remain supportive features, but with outside market influences and a more favorable near-term weather outlook, buyers weren't inspired to step in front of the bearish momentum, traders said.


The DTN Meteorlogix weather forecast features dry conditions during the balance of this week across the Midwest. This trend offers the potential to firm up yield prospects for fall harvest, and will allow fields to dry out after flooding rains of last week.


Temperature values in the corn-belt will be up to 15 degrees Fahrenheit above-normal this week. Actual readings will range from 75 to 82 Fahrenheit. This temperature trend will further benefit crops needing to ripen and fields needing to dry out, Meteorlogix added.


In pit trades, speculative fund selling is estimated at 5,000 lots.





Soy product futures tumbled in unison with soybeans, succumbing to broad-based speculative liquidation in commodity asset classes. Soyoil plunged to its lower daily trading limits, with fears of reduced demand in world vegoil markets, as economic slowdowns have the potential to temper eating habits overseas, analysts said.


Soymeal futures followed the lead of the rest of the complex, but continued to gain product share on spreads amid tight nearby supplies.


December oil share ended at 40.76% and the November/December crush ended at 64 1/4 cents.


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


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