Chicago Board of Trade soybean dove to a one-month low as mild weather for the soy crop as it enters pod setting and filling ignited speculative selling, traders said. As August approaches - the key yield determining period for soybeans Midwest crops were benefiting from recent rains and cooler temperatures. The outlook for this week was also nonthreatening to crops.
"Rain makes grain is what we're looking at," said Roy Huckabay, analyst with The Linn Group in Chicago. Traders expected crop conditions to improve by 1-2 percentage points in the good to excellent categories in this week's USDA progress update released Monday afternoon. But after the markets closed, USDA reported a one-point decline, rating 61 percent of crop good-to-excellent.
Selling escalated as the market dipped below its 50-day moving average. August soy closed 34 cents weaker at $8.16-1/4 per bushel, below its 50-day MA of $8.32-1/2. New crop November ended 34-1/4 weaker at $8.41, after falling below is 50-day MA of $8.57-3/4.
The products took their cue from soybeans, brushing off supportive news that India cut its customs duty on a variety of vegetable oils, including soybean oil to 40 percent from 45 percent. "We have some stronger values in Europe for the palm oil sector - it feels like it's coming off with the crude oil break," said one CBOT trader.
Soyoil closed 0.60 to 0.82 cent per lb weaker; August was down 0.82 cent at 36.67 cents. New York September crude oil ended 90 cents lower at $74.89 per barrel. Meal ended $3.20 to $11.50 lower, with August down $10.80 at $214.40. Commodity funds sold 7,000 soybean contracts, 2,000 soymeal and 4,000 soyoil. The slide in the products stirred some commercial pricing; commercials bought about 2,000 soymeal contracts and 2,500 soyoil, traders said.
With the drop in futures, CIF soy values at the US Gulf were up as much as 17 cents on Monday afternoon. US soy values were approaching Brazilian soy given the $1 drop in futures since July 13 and historically weak basis levels, traders said. But the drop in futures did not stir any panic selling of old-crop supplies among farmers, dealers said.
Midwest basis bids for soy were steady to firm late Monday. Weekly export inspections were disappointing. USDA reported that 3.4 million bushels of soybeans were inspected for export last week, below estimates for 8 million to 12 million. Trade data issued by the Commodity Futures Trading Commission late Friday showed that large speculators cut their net long positions in soybeans, soybean oil and soymeal in the week ended July 17.
Large speculators slashed their net long position in soybeans by nearly 10,000 lots to 109,000 and in soyoil by 3,600 contracts to 60,000, according the supplemental report. Managed funds net long position in soymeal futures/options fell slightly to 54,300 lots, down 480.