May 20, 2009

 

CBOT Soy Review on Tuesday: New highs; attempts to ration demand

 

 

Soybean futures on the Chicago Board of Trade rallied Tuesday, climbing to new highs for the current uptrend, as the market searches for price levels that will curb old crop demand.

 

CBOT July soybeans settled 15 1/2 cents higher at US$11.62 and November soybeans finished 9 cents higher at US$9.96.

 

July soymeal settled US$7.70 higher at US$374.00 per short tonne. July soyoil finished 1 point higher at 38.17 cents per pound. In pit trades, speculative fund buying was estimated at 4,000 lots in soybeans, 2,000 lots in soymeal and 1,000 lots in soyoil.

 

The market is still trying to find price levels that will slow consumption, as strong export demand continues to draw down tight old crop inventories, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D.

 

Weakness in the U.S. dollar makes U.S. supplies more attractive to world importers and that served as another bullish feature to keep buyers in control of price direction, Hoops added.

 

Technically inspired buying added to the upward push, with buyer enthusiasm picking up as old crop contracts satisfied near term upside objectives of climbing above previous highs.

 

The most active July future rallied to a new seven-month high, with bull spreads widening to new highs for spread as well.

 

The July/November spread settled at US$1.66 a bushel, up from Monday's settlement of US$1.59 1/2 cents.

 

New crop futures were supported by worries soybean planting in the eastern Midwest will continue to lag well behind, as this week's window of opportunity for seedings closes with rains forecast to return to the region early next week, analysts said.

 

The DTN Meteorlogix weather forecast for the Midwest calls for mostly dry conditions to be in effect over the eastern sector of the region through Sunday. This drier trend will improve conditions for planting, however, progress will remain very slow due to fields needing several days of dry weather just to be able to support farm equipment.

 

Scattered showers and thunderstorms will develop in the western Midwest later this week and the eastern Midwest early next week. Rainfall will favor corn and soybeans which are planted in the western Midwest, but will again disrupt and delay corn and soybean planting in the eastern Midwest, Meteorlogix forecasts.

 

 

SOY PRODUCTS

 

Soymeal futures climbed to higher ground Tuesday, rising to new eight-month highs. The market followed the bullish lead of soybeans, with concerns about tightening supplies and strong export demand attracting buyers, analysts said.

 

Soyoil futures edged higher, but lost ground to soymeal on spreads. Firmer crude oil futures and underlying export demand underpinned prices, but lagging domestic demand continues to hinder upside potential, analysts said.

 

July oil share ended at 33.81%. The July soybean crush ended at 80 3/4 cents.