September 26, 2008

 

CBOT Soy Review on Thursday: Lower; consolidates in two-sided action

 

 

Chicago Board of Trade soybean futures ended lower Thursday, consolidating in a two-sided affair that mirrored the ups and downs of crude oil futures for most of the day.

 

November soybeans ended 4 cents lower at US$11.83.

 

December soymeal settled US$4.00 lower at US$328.50 per short tonne. December soyoil finished 9 points higher at 48.29 cents per pound.

 

The market lacked fresh fundamental features to direct prices, leaving futures to consolidate in a recent trading range of US$11.70 to US$12.05 basis the November contract, said Brian Hoops of Midwest Market Solutions.

 

The market was a mirror image of crude oil futures for most of the day, directly tied to what speculative funds were doing in crude oil, Hoops added.

 

Crude oil is linked to soybeans because funds often trade commodities in a basket and because biodiesel is made from soyoil.

 

However, heading down the stretch, futures found pressure from end-of-the-day position evening, as traders remained reluctant to take on added risk in the face of macro economic uncertainties.

 

A downturn in soymeal prices weighed on soybeans as well, traders said. Most soybeans are crushed to produce soymeal, which can be used as a livestock feed ingredient, and soyoil, which can be used to produce biodiesel.

 

Soymeal accounts for the majority of the soy products in the soy crush spread, so price moves in soymeal have a greater impact on soybean prices, analysts said.

 

The market is expected to continue its consolidative theme in the absence of strong outside influences, as the market awaits the fall harvest to move into full swing, particularly with wide-ranging yield reports from early harvests, Hoops added.

 

The DTN Meteorlogix forecast said a more uncertain weather pattern presents itself for the central U.S. in the six- to 10-day timeframe, through the first weekend of October. Both the European and U.S. forecast models show unsettled weather over the eastern half of the Midwest next week. With this occurrence, the region will have a higher risk of showers, along with possibly some light frost. Crop weather promises to be more stressful going into the first weekend of October.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil garnering strength from advances in crude oil, while soymeal was pressured by oil/meal spreads as traders realigned the spread and product share, analysts said.

 

Soymeal also garnered pressured from a higher than expected meal stocks figure reported in the Census Crush report for August.

 

December oil share ended at 42.36% and the November/December crush ended at 71 cents.

 

Speculative fund selling was estimated at 1,000 lots in soymeal, while speculative funds were estimated buyers of 2,000 lots in soyoil.