June 2, 2009

 

CBOT Soy Review on Monday: Hits 8-month high on funds, outside markets

 

 

Fund buying and supportive outside markets shoved Chicago Board of Trade soybean futures to fresh eight-month highs Monday.

 

July soybeans closed up 34 1/2 cents at US$12.18 1/2 a bushel. July soymeal climbed US$8.30 to US$390.80 per short tonne, and July soyoil soared 140 points to 40.45 cents per pound.

 

Money flowed into commodities, including soybeans, as crude oil and equities rallied and as the U.S. dollar fell, traders said. Commodity funds bought an estimated 6,000 soybean contracts.

 

"The money's talking these days," an analyst said of the influence of new money on commodities.

 

July soybeans set an open-outcry session high of US$12.26, its highest price since Sept. 26. The Dow Jones Industrial Average, meanwhile, climbed more than 200 points and the Standard & Poor's 500 hit a new 2009 high.

 

The fundamental storyline for soybeans remains bullish amid concerns about tightening old-crop U.S. ending stocks, analysts said. Production problems in South America have shifted demand to the U.S.

 

There were rumors that China had canceled two to three U.S. cargoes of soybeans, but that the news "didn't bother" the market a bit, said John Kleist, broker and analyst at Allendale. Strong demand from China has helped soybeans rally in recent weeks.

 

"When you get into this type of situation, where the money just keeps on pouring in, what's bullish is bullish and what's bearish is bullish," Kleist said.

 

Weekly U.S. soybean export inspections of 8.81 million bushels looked "a little slower" compared to the recent pace, but outside markets and new money pulled prices higher, an analyst said. Analysts had expected inspections of 9 million to 18 million bushels.

 

U.S. soybean plantings are expected to be 65% to 75% complete in the U.S. Department of Agriculture's crop progress report, due out at 4 p.m. EDT, traders said. A week ago, the crop was 48% planted.

 

 

Soy Products

 

CBOT soy products futures ended sharply higher with soybeans on rallying outside markets and fund buying, traders said. Commodity funds bought an estimated 1,000 soymeal contracts and 3,000 soyoil contracts.

 

Gains in crude oil helped support the soy complex and soyoil in particular, an analyst said. The weak U.S. dollar added support, he said.