September 24, 2008
CBOT Soy Review on Tuesday: Stumbles on bearish outside market forces
Soybean futures on the Chicago Board of Trade stumbled Tuesday, succumbing to speculative sales associated with bearish outside market forces.
November soybeans ended 18 cents lower at US$11.87.
December soymeal settled US$2.00 higher at US$330.00 per short tonne. December soyoil finished 180 points lower at 48.23 cents per pound.
Strength in the U.S. dollar and weakness in crude oil and precious metals took some inflation fears out of the market, opening the door for profit taking to surface following Monday's sharp gains, analysts said.
Overall activity was rather subdued, with many traders comfortable staying on the sidelines in the absence of fresh fundamental news and the uncertainty of volatile financial markets, analysts added.
Near term weather conditions in the Midwest remain favorable for late developing crops, with the absence of a frost threat providing some underlying pressure for prices as well.
Traders said the day seemed like one big waiting room, with many participants focused on Federal Reserve Chairman Ben Bernanke and U.S. Treasury Secretary Henry Paulson's testimonies before the U.S. Senate Banking Committee on turmoil in the U.S. credit markets and the recent actions involving government-sponsored enterprises, investment banks and other financial institutions.
The DTN Meteorlogix Weather Service forecast calls for rains of up to three-quarters of an inch, with locally heavier amounts in the western Midwest, during Tuesday.
However, the balance of this week continues to feature a generally dry weather pattern for the central, eastern, and southern Midwest. This outlook brings additional favorable weather for allowing further receding of floodwaters, drying out of fields, and possible early harvest activity, Meteorlogix said.
U.S. and European forecast models both indicate generally warm temperatures across the majority of the Midwest through early October. There will be some brief cooling to below-normal temperatures in the Midwest for a time, but this trend doesn't look to be an intense cold wave that would cause widespread frost or freezing conditions to occur, Meteorlogix added.
In pit trades, speculative fund selling is estimated at 3,000 lots.
Soy product futures ended mixed, with soyoil dropping on speculative profit taking, spillover from crude oil and Asian vegoils.
Soymeal futures managed to divorce itself from the bearish tonnee filtering through the rest of the complex, benefitting from corrective activity in the soyoil/soymeal spread and underlying support from tight nearby supplies, analysts said.
December oil share ended at 42.22% and the November/December crush ended at 69 1/2 cents.
Speculative fund selling was estimated at 1,000 lots in soymeal, while speculative funds were estimated sellers of 2,000 lots in soyoil.