June 6, 2008

 

CBOT Soy Review on Thursday: Soars on wetness, planting delay fears

 

 

Concerns about delayed U.S. soy planting and development due to excessive rain shoved Chicago Board of Trade soybean futures sharply higher Thursday.

 

July soybeans soared 63 cents to US$14.52 per bushel, and November soybeans surged 52 1/4 cents to US$14.32. July soymeal closed up US$13.50 at US$373.50 per short tonne, and July soyoil closed up 218 points at 62.65 cents per pound.

 

Conditions will remain wet in many areas across the U.S. corn belt through next week, according to T-Storm Weather. Iowa, in particular, has saturated soils and the highest chances for more moisture during the next seven to 10 days, the private weather firm said.

 

"It's staying too wet, too long," said Tim Hannagan, analyst for Alaron. "This week's rains were far too much. It's lending thought to the idea that not only will corn acres go unseeded but also bean acres will go unseeded."

 

The U.S. Department of Agriculture said 69% of the soy crop was planted as of June 1, behind the average of 81%, and 32% was emerged, behind the average of 55%. Although soybeans can be planted later than corn, delayed soy seeding could cause yield declines or force some producers to abandon their planting intentions, traders said.

 

There is "the threat of acres getting in too late and maybe not being planted at all," Hannagan said.

 

Commodity funds were buyers of an estimated 5,000 soybean contracts. The ongoing Argentine farmers' strike added support to the soy complex, as demand is shifting to the U.S., an analyst said.

 

The market saw a "bullish upside breakout" from a weeks-old sideways trading range, a market technician said. Profit-taking could weigh on prices Friday ahead of the weekend, Hannagan said.

 

However, traders don't want to be holders of short, or sold, positions ahead of the USDA's June supply/demand report due out Tuesday, Hannagan said. The market should firm up again Monday as "bearish government reports are hard to come by" due to tight soy supplies, he said.

  

 

Soy Products

 

CBOT July soymeal temporarily climbed the daily, exchange-imposed limit of US$20 before trimming gains. Commodity funds bought an estimated 4,000 soyoil contracts and 3,000 soymeal contracts.

 

Bullish worries about excessive rain in U.S. growing areas and the persistent Argentine farmers' strike boosted prices. Weekly U.S. soymeal export sales of 287,500 tonnes were "phenomenal," an analyst said.

 

A sharp drop in soybean oil stocks reported by the Census Bureau also was seen as bullish for CBOT soyoil futures. The Census Bureau said stocks totaled 2.925 billion pounds, compared to the preliminary estimate of 3.015 billion on May 22.