May 15, 2007

  

CBOT Soy Review on Monday: Up on tightening stocks, supportive technicals

 

 

Chicago Board of Trade soybean futures ended higher Monday, continuing Friday's bullish theme with concerns over tightening projected new-crop stocks, and supportive technicals attracting speculative buyers.

 

July soybeans settled 8 3/4 cents higher at US$7.70 1/2, and November soybeans finished 8 3/4 cents higher at US$7.99 1/2. July soymeal settled US$4.70 higher at US$206.50 per short tonne. July soyoil ended 10 points higher at 34.49 cents a pound.

 

The market continues to factor in the risks of shrinking margins of error for the 2007 soybean crop, with Friday's supply and demand report projecting ending stocks falling by nearly half under normal weather conditions, analysts said.

 

The uncertainty of the 2007 crop, with the bulk of plantings still ahead and every bushel counted on this year to meet strong projected demand, remained an underpinning feature, traders said. In addition, technical price strength added to the gains, with buyers encouraged by the market's ability to hold firmly above major moving average support, analysts added.

 

Overall activity was relatively subdued after the initial run to session highs, with traders looking ahead to Monday's afternoon's U.S. Department of Agriculture weekly crop progress report. Analysts expect planting progress to fall in a range of 25% to 35% complete.

 

The National Oilseed Processors Association said Monday its April soybean crush rates were 138.720 million bushels, above the average of analysts' expectations at 137.1 million bushels. It was also significantly below the March figure of 147.991 million bushels. Analysts expected a decline in the crush due to seasonal processor down time, according to a survey of industry analysts. Soyoil stocks were reported at 2.901 billion pounds, below average trade estimate of 3.013 billion and below the March stock figure of 2.933 billion.

 

In other news, 14 Chinese soybean processing companies that represent the majority of the soybean purchasing power of China signed 17 contracts with U.S. agricultural exporters to buy 5.76 million metric tonnes of U.S. soybeans at a signing ceremony held at the Chicago Board of Trade Monday. The Chinese purchases were made with eight U.S. agricultural exporters valued at US$2.07 billion.

 

Meanwhile, the DTN Meteorlogix forecast calls for a band of showers and thunderstorms to cross the Midwest from north to south. This shower pattern will bring up to one inch of rain to the western Midwest, and up to three-quarters of an inch precipitation to the eastern Midwest. Following a weekend of very warm and dry weather in the corn belt, these showers will be beneficial for germination and early growth of crops.

 

There will be some chilly weather by the end of this week in the Great Lakes vicinity, with some possible light frost. The six- to 10-day outlook for the Midwest has a promising round of rainfall in its depiction. The outlook is for normal to above-normal temperatures and precipitation. If this outlook remains steady, it would be beneficial for early season rainfall for crop emergence and growth, Meteorlogix reports.

 

In pit trades, ADM Investor Services bought 1,000 July and 500 November, Man Financial bought 1,200 July, and Goldenberg, Iowa Grain Tenco each bought 500 July. Speculative fund buying was estimated at 7,000 contracts. Sellers were scattered among various commission houses.

 

 

SOY PRODUCTS

  

Soy product futures ended higher across the board, climbing in step with rallying soybean futures. Supportive stocks data in the monthly NOPA crush report provided support to soyoil futures until late profit-taking surfaced to trim earlier gains. Soymeal futures were underpinned by spillover support from soybeans and light soyoil/soymeal spread unwinding, analysts said.

 

July oil share ended at 45.54% and the July crush ended at 63 cents.

 

In soyoil trades, JP Morgan bought 300 July and 400 December; Tenco bought 400 December; Fimat and Iowa Grain each bought 300 July; and UBS Securities bought 300 September. Sellers were widely scattered among various commission houses. Speculative fund buying was estimated at 1,000 lots.

 

In soymeal trades, JP Morgan bought 600 July; Bunge Chicago and Fortis each bought 300 July; and Man Financial bought 400 July. Bunge Chicago sold 300 July and 300 December. Speculative fund buying was estimated at 1,000 lots.