October 7, 2008


CBOT Soy Review on Monday: Plunges daily limit on economic turmoil



Macroeconomic turmoil was the springboard for speculative liquidation in Chicago Board of Trade soybean futures Monday, with prices plummeting to one-year lows.


November soybeans ended limit-down 70 cents at US$9.22.


December soymeal settled US$19.90 lower at US$249.90 per short tonne. December soyoil finished 250 points lower at 40.00 cents per pound.


The deleveraging of speculative funds in the market was the central focus of activity, with fundamentals playing only a minor role in the overall make-up of price action, said Gavin Maguire, director at E-hedger.


A supportive export sales announcement, some disappointing yield reports from early harvests, forecasts for potential harvest delays due to forecasted rains and commercial bargain hunting provided mild support through midday.


However, the support was short-lived, as 99.9% of Monday's price movement was attributed to money flow and ongoing fund liquidation, said Brian Hoops, president of Midwest Market Solutions.


Speculative funds were trying to pare their losses, with crude oil tumbling, a strengthening U.S. dollar and ideas that a slowdown in global economic growth will diminish U.S. agricultural domestic and export demand, Hoops added.


Looking ahead, traders anticipate some follow-through selling on the overnight session, with prices synthetically trading 4 to 6 cents lower, in a range of US$9.16 to US$9.18 basis the November contract in the options pit, traders said.


CBOT soybeans will trade with expanded daily trading limits of US$1.05 a bushel Tuesday.


In demand news, the U.S. Department of Agriculture announced private exporters reported orders for 185,000 metric tonnes of U.S. soybeans to unknown destinations for delivery in the 2008-09 marketing year.


USDA is scheduled to release its weekly crop progress report at 4 p.m. EDT.


The DTN Meteorlogix forecast said rain is expected in the western Midwest Monday and Tuesday. That system will move into the east Tuesday and Wednesday. Rainfall totals are expected to be up to an inch in the western Midwest and up to an inch and a half in the eastern Midwest over the next couple days.


In pit trades, speculative fund selling was estimated at 4,000 lots.





Soy product futures tumbled in step with soybeans. Soyoil futures dropped to their exchange imposed daily trading limit, succumbing to widespread liquidation pressure, with sharp declines in crude oil and a firmer U.S. dollar attracting broad-based sales, analysts said. Widening global economic woes were the backdrop for the sales.


Prices were synthetically trading in a range of 39.60 to 39.70 cents per pound basis the December contract in the options pit, traders said.


December oil share ended at 44.45% and the November/December crush ended at 67 3/4 cents.


Speculative fund selling was estimated at 1,000 lots in soymeal and 2,000 lots in soyoil.


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