September 27, 2008


CBOT Soy Review on Friday: Lower on speculative sales, economic woes



Soybean futures at the Chicago Board of Trade backpedaled Friday, declining on speculative selling, as bearish sentiment linked to economic woes kept buyers sidelined.


November soybeans ended 19 cents lower at US$11.64.


December soymeal settled US$7.80 lower at US$320.70 per short tonne. December soyoil finished 36 points lower at 47.93 cents per pound.


The defensive tonnee was consistent, with traders unwilling to take on added risk, as participants remained apprehensive to market exposure amid the impact of the macro economic financial crisis, analysts said.


Spillover weakness from crude oil served as a catalyst throughout, with declining cash market prices and favorable weather outlooks for harvest operations and late maturing crops added to the bearish theme, analysts added.


Technical weakness was a factor as well, with declines accelerating once the most active November future fell below chart support at the low end of the week long trading range and its ability to penetrate its 10-day moving average, traders added.


Otherwise, activity was relatively subdued with buyers sitting on their hands in the absence of fresh news, a CBOT floor broker said. Traders were clearly focused on the potential outcome of congressional negotiations on a US$700 billion bailout plan for the financial sector, and until that deal is hammered out, analyst expect soybeans will remain in a consolidative to bearish trend.


Meanwhile, modest support was generated from private weather forecasts pointing to the potential for freezing temperatures to move as far south as I-80 in the Midwest later next week.


Looking ahead, U.S. Department of Agriculture is scheduled to release its Quarterly Grain Stocks report Tuesday 8:30 a.m. EDT (1230 GMT). The average estimate of analysts surveyed by Dow Jones for the 4th quarter soybean usage is around 532 million bushels, bringing stocks down to 144 million bushels. Estimates ranged from 125 million to 172 million. Stocks as of Sept. 1, 2007, totaled 574 million. USDA's September ending stock projection was 140 million bushels.


In pit trades, speculative fund selling was estimated at 2,000 lots.





Soy product futures stumbled in unison with soybeans, pressured by speculative selling attributed to falling crude oil prices and skittish behavior amid the lingering uncertainty of the U.S. and global economies, analysts said.


December oil share ended at 42.77% and the November/December crush ended at 68 3/4 cents.


Speculative fund selling was estimated at 1,000 lots in soymeal, and in soyoil.


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