November 21, 2008
CBOT Soy Review on Thursday: Tumbles on falling equities, crude oil
Soybean futures on the Chicago Board of Trade tumbled Thursday, dropping to four-week lows as falling equities and crude-oil futures generated broad-based bearish economic sentiment.
CBOT January soybeans finished 41 cents lower at US$8.56.
January soymeal settled US$11.10 lower at US$258.50 per short tonne. January soyoil finished 135 points lower at 31.00 cents per pound.
The global economy is painting a scary picture, and traders are taking a very cautious approach to buying as financial uncertainty continues to override fundamental features, said Joe Victor, analyst with Allendale Inc. in McHenry, Ill.
The most active January future gapped lower on technical charts, with declines accelerating once underlying support levels were breached. Bearish macro market influences kept buyers' hands in their pockets, aside from midday short covering that emerged on a recovering in the stock market. However, a late slide in crude oil below the psychological US$50-a-barrel levels coupled with a late drop in equities provided late pressure to send prices tumbling to session lows on the close, analysts added.
Meanwhile, solid weekly export sales provided mild support, but failed to underpin prices amid outside market weakness and private weather forecasts calling for rain to move into parched South American crops areas next week.
Nevertheless, traders anticipate prices will continue to linger in their recent range with a negative bias until the doom and gloom of outside markets run its course, analysts added.
The DTN Meteorlogix weather forecast said Argentina's central crop belt has a chance at showers during the next week. However, this is only a slight round of rainfall, and doesn't appear to be the start of a better precipitation trend for the region.
In pit trades, speculative fund selling was estimated at 4,000 lots.
Soy product futures ended lower in step with soybeans. Outside market weakness served as the catalyst for the declines, with soyoil tightly wound up with crude oil's losses, large world vegoil supplies and deflationary worries, said Bill Nelson of Doane Agricultural Services.
January oil share ended at 37.32% and the January crush ended at 53 3/4 cents.
Speculative fund selling was estimated at 1,000 lots in soymeal, and 2,000 lots in soyoil.