October 17, 2008


CBOT Soy Review on Thursday: Up; bounce on short covering, rise in equities



Chicago Board of Trade soybean futures ended higher Thursday, rebounding from early losses on speculative short-covering and a recovery in outside equity markets.


CBOT November soybeans ended 9 cents higher at US$8.67 a bushel, after the contract dropped to its lowest level since May 2007 earlier in the session.


December soybean meal settled US$7.50 lower at US$252.00 per short tonne. December soybean oil finished 8 points lower at 35.45 cents per pound.


Outside markets continued to influence price direction. A late rise from early lows in the stock market coupled with a commercial led bounce in soymeal provided support to spark sellers to cover positions heading down the stretch, said Vic Lespinasse, analyst with grainanalyst.com.


The Dow Jones Industrial Average was 27 points lower at the close of CBOT Ag markets, well off the 400-point slide seen earlier in the day. Crude-oil futures were US$4.00 a barrel lower at the soybean close.


The rally started in soymeal, with active commercial spreading and a lack of speculative selling triggering a bounce in prices, Lespinasse added.


Oversold market conditions and light concerns surrounding potential harvest slowdowns added strength to underpin prices despite sharp declines in crude oil, traders said.


However, the market's rise was limited by lingering global economic uncertainty, with traders unwilling to aggressively push the market amid fears of lost demand, as recession worries spread around the world.


The DTN Meteorlogix forecast said in the next five days, dry weather will cover the entire central U.S. This will allow harvest to restart in the Mississippi Valley and eastern Midwest. However, the western Midwest will be much slower to resume harvest due to recent heavy rains of one to four inches in this sector of the U.S. Corn Belt. Tuesday through Thursday next week, a new slow-moving weather system is featured on forecast charts for the Plains and western Midwest. This system will produce rain of more than an inch in the region, the private weather firm added.


On tap for Friday, the U.S. Department of Agriculture will issue its weekly export-sales report at 8:30 a.m. EDT. Soybean sales are estimated at 500,000 to 800,000 tonnes. Soymeal sales are projected in a range of 100,000 to 150,000 metric tonnes, with soyoil sales expected in a zero- to 15,000-tonne range.





Soy product futures ended mixed, with soymeal rallying from early losses as commercial spreading ignited a buying push, analysts said. Soyoil futures were unable to bounce into positive territory with the rest of the complex, but did finish well off early lows. Meal/oil spreading and weakness in crude oil futures managed to keep a lid on soyoil's upside potential, traders added. Soyoil lost product share to meal once again, with oil share nearly a full percentage point.


December oil share ended at 41.29% and the November/December crush ended at 77 1/4 cents.


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