June 5, 2009

 

CBOT Soy Review on Thursday: Soars to 8-month highs on inflation concerns

 

 

Chicago Board of Trade soybean futures soared Thursday, rising to new eight-month highs, as an influx of managed money flowed into commodities because of inflationary concerns.

 

CBOT July soybeans settled 48 cents higher at US$12.30 and November soybeans finished 34 1/2 cents higher at US$10.81 1/2.

 

July soy meal settled US$19.50 higher at US$399.00 per short tonne. July soyoil finished 109 points higher at 40.34 cents per pound. In pit trades, speculative fund buying was estimated at 6,000 lots in soybeans, and 2,000 lots each in soymeal and soyoil.

 

Inflationary signals associated with weakness in the U.S. dollar, higher crude oil and precious metals triggered an across the board stampede of speculative buying in commodities, said Bill Nelson, analyst with Doane Advisory Services in St. Louis.

 

Outside markets were a driving factor in soybeans' climb, with traders thinking Wednesday's profit taking setback was overdone, uncovering buying interest as well Meanwhile, bull spreads were featured also, with tight old crop stocks and outlooks for increased new crop acreage amid spring planting delays widening the differential between old and new crop contracts, analysts said.

 

The July/November bull spread settled at US$1.48 1/2 a bushel, up from Wednesday's settlement of US$1.35 cents.

 

The impact of outside markets overshadowed concerns of a slow down in export demand, with a cancellation of a prior Chinese purchase of U.S. soybeans failing to temper upside enthusiasm, analysts said.

 

The U.S. Department of Agriculture said total weekly soybean export sales for 2008-09 in the week ended May 28 were a net sales reduction of 24,000 metric tonnes. The sales included net sales reductions to China and unknown destinations totaling 112,600 and 43,300 metric tonnes, respectively.

 

Cool, wet weather in the eastern Midwest is expected to extend planting delays, and that could lead to additional acres shifting to soybeans from corn and spring wheat, traders said.

 

The DTN Meteorlogix weather forecast calls for generally cool weather in the Midwest during the next five days. Temperatures will be in the range of 5 to 12 degrees Fahrenheit below average. This cool trend, following delayed planting in many areas, is unfavorable for crop development.

 

Eastern Midwest crop areas will remain in a pattern of light to moderate rain showers through the middle of next week - with only minor dry-weather intervals, Meteorlogix forecasts.

 

 

Soy Products

 

Soy product futures spiked in unison with soybeans, staging a strong recovery from Wednesday's losses on technically based buying and inflationary concerns. Soymeal futures soared to 10-month highs, energized by broad based speculative buys, and fundamental support from tight available nearby supplies amid solid export demand, analysts said.

 

Soyoil futures spiked in step with the rest of the soy complex, garnering strength from surging crude oil futures. However, soyoil remained within its recent trading range, as ample nearby supplies limit upside potential, analysts said.

 

July oil share ended at 33.59%. The July soybean crush ended at 91 1/2 cents.