June 10, 2009

 

CBOT Soy Review on Tuesday: Climb on dollar weakness; tight stocks

 

 

Soybean futures on the Chicago Board of Trade ended higher Tuesday, rising to nearly 9-month highs on weakness in the U.S. dollar and bullish ending stock outlooks.

 

CBOT July soybeans settled 11 cents higher at US$12.43 1/2 and November soybeans finished 20 3/4 cents higher at US$10.72 1/2.

 

July soymeal settled US$6.10 higher at US$407.80 per short tonne. July soyoil finished 5 points higher at 39.45 cents per pound. In pit trades, speculative fund buying was estimated at 3,000 lots in soybeans and 1,000 lots in soymeal, Speculative funds were estimated net sellers of 2,000 lots in soyoil.

 

A sharp slide in the U.S. dollar served as the catalyst for the day's gains, with speculative short covering ahead of Wednesday's U.S. Department of Agriculture reports providing the spark to lift prices, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The industry is anticipating bullish data from USDA Wednesday, with tighter old and new crop ending stocks anticipated in the reports, said Scoville.

 

Tight old crop stocks remains a recurring theme in the market, while the stumbling U.S. dollar provided broad based inflationary buying to firmly underpin prices as well.

 

A lower U.S. dollar makes U.S. export prices for soybeans and soymeal more competitive and attractive to world importers.

 

The old/new crop bull spread was featured once again, with tight availability of old crop inventories supporting nearby contracts. However, as the session drew to a close, the evening up of positions saw profit taking trim gains in the spread, as traders reduced some risk heading into Wednesday's USDA reports.

 

The July/November bull spread settled at US$1.69 a bushel, down from Monday's settlement of US$1.80 3/4.

 

The DTN Meteorlogix weather forecast calls for widespread moderate to heavy rain in the central U.S. crop areas during the rest of this week. A swath of rainfall totals of 2 to 3 inches or more is likely to cover most of Iowa, Illinois, Indiana and Ohio. The rain will likely keep field work and planting slow, especially for the soybean crop.

 

Forecast models highlight a developing surge of warmer and drier conditions over the Plains, Midwest and Delta during the 10-day time period ending Friday, June 19, Meteorlogix forecasts.

 

On tap for Wednesday, U.S. Department of Agriculture is scheduled to release its June supply and demand tables, with a strong export and crush pace seen tightening the 2008-09 balance sheet. The report is scheduled to be released at 8:30 a.m. EDT (1230 GMT).

 

The average of analysts' estimates peg 2008-09 U.S. soybean ending stocks at 114 million bushels, down 16 million from May's forecast. The estimates ranged between 99 million and 130 million bushels. The average of analyst estimates pegged 2009-10 marketing year ending stocks at 211 million bushels, down from the May forecast of 230 million bushels. The estimates ranged from 140 million to 376 million bushels.

 

 

SOY PRODUCTS

 

Soy product futures settled higher, with soymeal the upside leader, as very tight nearby soymeal supplies buoyed nearby soymeal and bull spreads to new highs. Lingering concerns about crusher's inability to secure adequate soy supplies to meet demand as well as their troubles associated with producing 48% meal are bullish fundamental features, analysts say.

 

Soyoil futures are higher, garnering support from firmer crude oil futures, while meal/oil spreading kept a lid on advances, analysts said.

 

July oil share ended at 32.59%. The July soybean crush ended at 87 3/4 cents.