September 30, 2008


CBOT Soy Review on Monday: Tumbles; economic woes uncover speculative sales



Bearish outside market influences amid an uncertain macroeconomic outlook triggered speculative selling to drop soybean futures on the Chicago Board of Trade to their exchange-imposed 70-cent daily trading limits Monday.


November soybeans ended 70 cents lower at US$10.94.


December soymeal settled US$19.30 lower at US$301.40 per short tonne. December soyoil finished 250 points lower at 45.43 cents per pound.


The market was overridden by strength in the U.S. dollar and weakness in energy markets, specifically crude oil,said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.


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


Speculative long liquidation was featured as traders looked to reduce risk exposure in the face of U.S. and global economic problems.


The liquidation placed increased pressure on grain and soybean futures, predicated on uncertainty in the financial community, Roose added.


A bipartisan group of U.S. House of Representatives lawmakers defeated a US$700 billion rescue plan for Wall Street on Monday, further clouding the economic picture.


The limit-down slide in prices dropped soybean values to their lowest levels in nearly 6 months, with technical chart pressure and position evening ahead of Tuesday's crop report aiding the defensive theme.


The most active November futures ended the session synthetically trading in a range of US$10.85 to US$10.90, CBOT floor traders said. Daily trading limits for CBOT soybeans will expand to US$1.05 per bushel for Tuesday's session.


In pit trades, speculative fund selling was estimated at 3,000 lots.


Looking ahead, the U.S. Department of Agriculture is scheduled to release its Quarterly Grain Stocks report Tuesday at 8:30 a.m. EDT (1230 GMT). The average estimate of analysts surveyed by Dow Jones for fourth-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.





Soy product futures tumbled in unison with soybeans, succumbing to speculative long liquidation as buyers ran for cover in the face of economic worries. Weakness from crude oil and strength in the U.S. dollar were a formidable combination that triggered the downward spiral, analysts said.


Soyoil futures dropped their exchange-imposed 250 point daily limit. The most active December futures ended the session synthetically trading in a range of 44.75 to 45.00 cents per pound, CBOT floor traders said.


Daily trading limits for CBOT soyoil will expand to 350 points for Tuesday's session.


December oil share ended at 42.98% and the November/December crush ended at 68 3/4 cents.


Speculative fund selling was estimated at 2,000 lots in soymeal, and 3,000 lots in soyoil.


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