October 15, 2008


CBOT Soy Review on Tuesday: Stumbles; weak outside markets, speculative sales



Soybean futures on the Chicago Board of Trade ended lower Tuesday, stumbling into the close, as weakness in outside markets uncovered speculative selling.


CBOT November soybeans ended 32 cents lower at US$8.96 a bushel, the lowest level on continuation charts since August 2007.


December soymeal settled US$9.20 lower at US$247.50 per short tonne. December soyoil finished 121 points lower at 38.00 cents per pound.


A late drop in U.S. equity markets coupled with a slide in crude oil prices sent bearish signals to traders. Technically inspired selling accelerated the losses once active contracts penetrated chart support at last week's lows, analysts said.


Global economic uncertainty remained a hindrance to upside potential, as the lack of investor confidence continued to keep stock markets volatile and commodity markets closely mirroring the movement in the financial sector, analysts added.


Near the close of soybean trading, the Dow Jones Industrial Average was down over 200 points and crude oil futures were down US$2.42 a barrel at US$78.77.


The combination was a bearish influence on prices.


Good harvest progress, monthly crush data below expectations and a lack of any supportive fundamentals to offset the defensive theme pinned prices in negative territory, traders added.


The U.S. Department of Agriculture will release its weekly crop progress report at 4 p.m. EDT. Analysts surveyed by Dow Jones Newswires anticipate soybean harvest progress between 50% and 60% complete.


The DTN Meteorlogix weather forecast calls for a continued favorable weather trend for harvest and crop maturity in the eastern Midwest. Any rainfall in the next few days over this sector will total less than one-half inch. Temperatures will cool a bit but will still be above freezing levels.


West of the Mississippi River, crop weather will be more stressful for the late stages. Freezing temperatures are forecast for the Dakotas, western Minnesota, northeastern Nebraska and northwestern Iowa. This cold snap will bring an end to the growing season in these areas, Meteorlogix said.





Soy product futures dropped in unison with soybeans Tuesday.


The bearish impact of weak outside markets served as the catalyst to attract sellers, with soyoil closely following the late slide in crude oil futures, analysts said.


Soymeal succumbed to the late speculative selling push, erasing price strength attributed to meal/oil spreading for most of the day. The most active December soymeal futures dropped to the lowest point since September 2007.


December oil share ended at 43.43% and the November/December crush ended at 66 1/2 cents.


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