September 25, 2008

 

CBOT Soy Review on Wednesday: Consolidates; outside support stalls

 

 

A lack of outside market support and the absence of fresh fundamental news produced a consolidative theme in Chicago Board of Trade soybean futures Wednesday.

 

November soybeans ended unchanged at US$11.87.

 

December soymeal settled US$2.50 higher at US$332.50 per short tonne. December soybean oil finished 3 points lower at 48.20 cents per pound.

 

The market traded on both sides of Tuesday's settlements during the day, unable to sustain lasting direction on the exhaustion of speculative buying and commercial pricing beneath the market, analysts said.

 

Futures initially bounced on euphoria left over from the overnight session, but with crude oil retreating lower and the U.S. dollar finding support, the market was vulnerable to speculative selling, said Jack Scoville, analyst with Price Futures Group.

 

Bearish near-term Midwest weather for late crop development and harvest opportunities applied weakness. However, uncertainty surrounding 2008 soybean yields and inflation fears remained underlying factors to limit downside pressure, with the market seemingly running out of selling power, Scoville added.

 

Outside market influences remain a dominant feature in the market place, with crude oil a commodity wide leader.

 

Perceptions any government bailout plan for the financial sector will encourage inflation is seen as bullish for commodities and should continue to limit selling pressure in the absence of fund liquidation, Scoville said. The DTN Meteorlogix forecast said rain in the western Midwest will cause more delays in crop progress and will limit early harvest efforts. There is also a chance for additional rains of as much as three-quarters of an inch over this sector of the corn belt during the coming weekend.

 

Across the remainder of the Midwest, conditions will be favorable for late-season crop progress. The rest of the week will feature dry weather with above-average temperatures. By the end of next week, both U.S. and European forecast models call for a wetter and cooler weather pattern to develop in the Midwest. This will bring the recently favorable conditions to an end, and offers the potential of reducing crop quality and harvest prospects, Meteorlogix reports.

 

On tap for Thursday, the Census Bureau's soybean crush report for August is scheduled for release at 8 a.m. EDT (1200 GMT). U.S. soybean crush for August is expected to be 128 million bushels in the U.S. Census Bureau's monthly report, down from the July crush figure of 139.1 million bushels. Soybean oil stocks are seen decreasing to 2.587 billion pounds in the report, from 2.780 billion the previous month. August soybean meal stocks are seen declining to 281,400 short tonnes from the 294,505 tonnes reported for July.

 

The U.S. Department of Agriculture at 8:30 a.m. EDT Thursday will issue its weekly export-sales report. Soybean sales are estimated at 200,000 to 700,000 tonnes. Soymeal sales are projected in a range of 50,000 to 125,000 metric tonnes, with soyoil sales expected in a zero-to-10,000-tonne range.

 

 

Soy Products

 

Soy-product futures ended mixed, with soyoil peeling back from early gains on spillover weakness from crude-oil futures. Soymeal futures climbed, finding strength from the unwinding oil/meal spreads, with underlying support from tight nearby supplies.

 

December oil share ended at 42.02% and the November/December crush ended at 74 3/4 cents.

 

Speculative fund buying was estimated at 1,000 lots in soymeal, while speculative funds were estimated sellers of 1,000 lots in soyoil.