June 10, 2008

 

CBOT Soy Review on Monday: Mixed; spreads featured; weather buoys new crop

 

 

Chicago Board of Trade soybean futures ended mixed Monday, with old- and new-crop contracts diverging over direction on the unwinding of bull spreads.

 

July soybeans settled 5 1/2 cents lower at US$14.52 and November soybeans ended 7 1/2 cents higher at US$14.47. July soymeal settled US$2.00 lower at US$371.00 per short tonne. July soyoil finished 4 points lower at 64.30 cents per pound.

 

Weather was a big influence on prices, with new-crop futures bolstered by fears heavy Midwest storms will force some replanting and unseeded fields will be planted beyond the time frame for optimal yield potential, said Brian Hoops, president Midwest Market Solutions.

 

Nearby contracts drifted lower, succumbing to weakness from ideas the suspension of the Argentina farmers strike could divert export business back to Argentina and lead to the cancellation of prior U.S. sales, Hoops added.

 

Meanwhile, spillover weakness from outside inflationary markets, pre-supply and demand report positioning and index fund rolling added further pressure to weigh on the front end of the market, analysts said.

 

Nevertheless, new-crop fundamentals stepped to the forefront of market attention Monday, as reports of flooded crop areas from Iowa, Missouri, southern Illinois across Indiana and Ohio sparked comparisons to the floods of 1993, when yields and acreage losses mounted, analysts added.

 

The weather is sparking enough fear to hold sellers at bay, as the longer its takes to seed the crop will trim yields and possibly entice farmers into taking preventive planting payments instead of risking poor yield potential, a CBOT floor analyst said.

 

The DTN Meteorlogix Weather forecast said more rain was expected in southern and eastern Missouri on Monday. South Dakota and Minnesota will see more showers Tuesday. On Wednesday, western and northern areas of the western corn-belt will see up to 2 inches of rain. That activity will spread into southern and eastern areas of the western Midwest Thursday.

 

East of the Mississippi River, more rain, up to one and a half inches, will fall Monday, but Tuesday and Wednesday are expected to be drier, Meteorlogix said. Thursday and Friday should see a return to scattered showers and thunderstorms, with up to another inch and a half expected.

 

Meanwhile, lower projected old- and new-crop U.S. soybean ending stocks are expected when the U.S. Department of Agriculture releases June supply and demand tables, with a strong export and crush pace seen tightening the 2007-08 balance sheet. The report is scheduled to be released Tuesday at 8:30 a.m. EDT (1230 GMT).

 

The average of analysts' estimates peg 2007-08 U.S. soybean ending stocks at 134 million bushels, down 11 million from May's forecast. The estimates ranged between 101 million and 145 million bushels. The average of analyst estimates pegged 2008-09 marketing year ending stocks at 180 million bushels, down from the May forecast of 185 million bushels. The estimates ranged from 141 million to 285 million bushels.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed. Nearby soymeal futures ended lower, pressured by old/new crop spread unwinding and bearishness associated with the suspension of the Argentine framers strike, analysts said. The end of the strike could reduce demand for U.S. supplies, and traders trimmed some risk premium from prices, analysts added.

 

Soyoil futures stumbled down the stretch, erasing gains held over the course of the day. Spillover weakness from energy futures, fears of loss demand from the Argentine strike suspension, spread rolling and position squaring ahead of the report weighed on prices, traders said.

 

July oil share ended at 46.43% and the July crush ended at 71 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 1,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses.