October 22, 2008


CBOT Soy Review on Tuesday: Stumble; outside markets spark profit taking



Soybean futures on the Chicago Board of Trade ended lower Tuesday, backpedaling on speculative profit taking from prior gains and the bearish influence of outside markets.


CBOT November soybeans ended 21 cents lower at US$9.08 a bushel, January soybeans finished 25 1/2 cents lower at US$9.15 1/4.


December soymeal settled US$0.70 lower at US$265.80 per short tonne. December soyoil finished 181 points lower at 35.80 cents per pound.


The market remains in a decisive down trend, with technical weakness, slumping crude oil futures and losses in the stock market serving as the catalyst for the declines, said John Kleist, broker/analyst with Allendale Inc.


The November contract is gravitating around its 10-day moving average near the US$9.15 level, as it serves as a pivot point for up and price movement, Kleist said.


Exhausted buying following a recent corrective bounce opened the door for the setback. Lingering fears associated with global economic woes remained bearish influences to limit buyer confidence, traders said.


However, the market did find support on underlying export demand, talk of potential harvest slowdowns and variable harvest reports creating some "yield uncertainty" to underpin prices, Kleist added.


On the demand side, U.S. Department of Agriculture announced Tuesday private exporters reported the sale of 220,000 metric tonnes of U.S. soybeans for delivery to unknown destinations in the 2008-09 marketing year. USDA also reported the sale of 110,000 metric tonnes of U.S. soybeans for delivery to China in the 2008-09 marketing year.


The DTN Meteorlogix forecast for the Midwest calls for a major weather system to make its mark in the form of widespread precipitation and significant harvest delays during the rest of this week. Total precipitation will be one inch at least across the Midwest by Friday. However, the western half of Iowa, most of Nebraska and northwestern Missouri are in line to take in more than three inches of rain. This will keep harvest progress running well behind average - especially in Nebraska, Iowa and Missouri, Meteorlogix said.


In pit trades, speculative fund selling was estimated at 5,000 lots.





Soy product futures ended lower, giving back some of the corrective advances seen in prior sessions. Soyoil futures dropped sharply, pressured by spillover weakness from crude oil futures and technical pressure. Soymeal ended modestly lower, managing to trim earlier losses on spreads as the market gain product share on soyoil's slide, traders said.


December oil share ended at 40.24% and the November/December crush ended at 70 1/2 cents.


In pit trades, speculative fund selling was estimated at 2,000 lots in soymeal and 3,000 lots soyoil.