May 8, 2008

 

CBOT Soy Review on Wednesday: Rallies; Argentina strike sparks demand talk

 

 

Chicago Board of Trade soybean futures rallied Wednesday, climbing on bullish demand outlooks amid talk that a resumption of a full fledge Argentine farmers strike would shift export business to U.S. shores, analysts said.

 

May soybeans settled 32 3/4 cents higher at US$12.97 1/4, July soybeans finished 32 cents higher at US$13.09 and November soybeans ended 28 cents higher at US$12.45 1/2. July soymeal settled US$6.40 higher at US$334.20 per short tonne. July soyoil finished 132 points higher at 59.16 cents per pound.

 

The uncertainty of the strike buoyed prices throughout the day, with traders adding risk premium on talk of a lack of progress in negotiations between Argentine farm groups and the government, said Joe Victor, analyst with Allendale Inc. in McHenry, Ill.

 

New crop futures rallied as well, as futures tried to maintain a reasonable spread ratio with corn as the spread favors planting corn, Victor added.

 

Speculative led buying fueled the spike in prices, with news Argentine Agrarian Federation president Eduardo Buzzi said "the resumption of protests is imminent."

 

A resumption of a farm strike inched closer Wednesday as Argentina's government refused to discuss modification of the grain export tax in last ditch talks, people familiar with the situation told Dow Jones Newswires. Farm leaders met with Agriculture Secretariat Javier de Urquiza Wednesday morning, but the Secretariat was not authorized to discus the tax, Argentine Agrarian Federation president Eduardo Buzzi told reporters.

 

Otherwise, futures experienced a subdued trading atmosphere, with mixed signals from outside markets and lingering uncertainties tied to 2008 acreage keeping a cautious tonnee in the market, analysts said.

 

"Prices would probably have been higher if the U.S. dollar was not as firm today," said Vic Lespinasse, analyst with grainanalyst.com.

 

Looking ahead, traders are expected square positions ahead of Friday's supply and demand reports. The U.S. Department of Agriculture is expected to slightly decrease its estimates for 2007-08 soybean ending stocks, and will provide its first projections for the 2008-09 carryout when it releases its May supply and demand reports.

 

On tap Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Trade estimates put soybean export sales at 150,000 to 350,000 metric tonnes. Soymeal sales are projected in a range of 50,000 to 150,000 metric tonnes, with soy oil sales expected in a 5,000- to 15,000-tonne range.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy products rallied in unison with soybeans, buoyed by the Argentine strike situation that is seen increasing U.S. export demand, analysts said. Soyoil futures bounced despite lower crude oil prices and strength in the U.S. dollar. Meanwhile, soymeal fed off the strength in soybeans, with strong world protein demand and a need to keep the oil/meal spread relationship inline underpinned prices as well, analysts added.

 

July oil share ended at 46.95% and the July crush ended at 77 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,500 lots.