October 23, 2008


CBOT Soy Review on Wednesday: Tumble; economic woes spark speculative sales



Soybean futures on the Chicago Board of Trade tumbled Wednesday, extending their retreat from early week highs, as bearish outside market influences rekindled speculative selling interest.


CBOT November soybeans ended 49 cents lower at US$8.59 a bushel. January soybeans finished 50 1/2 cents lower at US$8.64 3/4.


December soymeal settled US$8.50 lower at US$257.30 per short tonne. December soyoil finished 250 points lower at 33.33 cents per pound.


Global economic worries continued to put pressure on equities and energies, which spilled over to grain and soy futures, a CBOT floor analyst said.


Strength in the U.S. dollar played a pivotal role to add bearish momentum to the market's spiral. Worries that a global recession will lead to reduced demand served as a key influence to keep buyers on the sidelines as well, analysts added.


The Dow Jones Industrial average was down more than 400 points and crude oil futures were more than US$5.00 a barrel lower when the CBOT Ag complex closed. The U.S. dollar climbed to a multi-year high.


However, good demand and the uncertainty of 2008 yields should allow futures to hold recent lows on breaks, barring any further price collapse in outside financial markets, analysts added.


The DTN Meteorlogix forecast for the Midwest calls for significant harvest delays due to moderate to heavy rain during the next three days. Rainfall totals of more than 2 inches are possible in Nebraska and Iowa, and more than 1 inch of rain is in store elsewhere in the region except for the immediate Great Lakes.


On tap for Thursday, the Census Bureau's soybean crush report for September is scheduled for release at 8 a.m. EDT (1200 GMT). U.S. soybean crush for September is expected to be 127.1 million bushels in the U.S. Census Bureau's monthly report, down from the August crush figure of 128.7 million bushels. Soybean oil stocks are seen decreasing to 2.416 billion pounds in the report, from 2.599 billion the previous month. September soybean meal stocks are seen declining to 336,000 short tonnes from the 413,400 tonnes reported for August.


The U.S. Department of Agriculture at 8:30 a.m. EDT Thursday will issue its weekly export-sales report. Soybean sales are estimated at 600,000 to 900,000 tonnes. Soymeal sales are projected in a range of 125,000 to 200,000 metric tonnes, with soyoil sales expected in a 5,000-to-15,000-tonne range.


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





Soy product futures plunged Wednesday, with soyoil leading the descent en route to closing at its 250-point-lower daily trading limit. Tumbling crude oil prices, bearish global recession fears, a stronger U.S. dollar and the liquidation of oil/meal spreads served as catalysts to pressure prices, analysts said.


The daily trading limit for soyoil on Thursday will expand to 350 points because of the limit-down close, according to the CME Group's Web site.


Soymeal followed suit, but spreading between the products allowed the market to gain product share.


December oil share ended at 39.29% and the November/December crush ended at 73 1/2 cents.


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