October 4, 2008

 

CBOT Soy Review on Friday: Backpedals on speculative sales, hedge pressure

 

 

Chicago Board of Trade soybean futures sank to nearly 11-month lows Friday, backpedaling from early gains on speculative selling and hedge-related sales.

 

November soybeans ended 12 cents lower at US$9.92.

 

December soymeal settled US$4.70 lower at US$269.80 per short tonne. December soyoil finished 68 points lower at 42.50 cents per pound.

 

Speculative selling surfaced to erase early price strength, with crude oil futures backing off highs and a lack of bullish confidence to sustain advances opening the door for a late-session sell-off, a CBOT floor analyst said.

 

A lack of follow-through buying and ideas that slowing global economic growth will curtail demand added to the defensive theme. Meanwhile, favorable weather outlooks for an active weekend harvest uncovered hedge pressure to weigh on prices down the stretch as well, traders said.

 

Futures found early strength from optimism that the U.S. House of Representatives would approve a rescue bill for the credit markets as well as outlooks for lower 2008 yields and larger carryout.

 

However, fears of declining demand and a private crop forecast pointing to stronger yield potential left futures susceptible to late-session selling, traders added.

 

The DTN Meteorlogix forecast said the chance for rain becomes a notable forecast feature through next week in the Midwest and Delta. In the Midwest, rainfall increases early next week, possibly delaying field work. Delta areas will have fairly wet weather Tuesday and Wednesday.

 

Private analytical firm Informa Economics on Friday estimated 2008-09 soybean production at 3.001 billion bushels, with a yield of 40.9 bushels per acre. U.S. Department of Agriculture last month put soybean production at 2.934 billion bushels and yield at 40.0 bushels per acre. The USDA is due to issue updated production and yield forecasts at 8:30 a.m. EDT Oct. 10.

 

Brazilian soy growers will start the planting season with good weather this year, the Agriculture Ministry said Friday. Government meteorologists said rainfall in the southeast and center-west soybean belt will see normal to slightly above-normal rainfall over the next three months.

 

 

SOY PRODUCTS

 

Soy product futures stumbled, pulling back in unison with soybeans. Bearish momentum and a lack of supportive influences to sustain early advances weighed on both soymeal and soyoil down the stretch.

 

December oil share ended at 44.06% and the November/December crush ended at 69 cents.