June 11, 2009

 

CBOT Soy Review on Wednesday: Beans end up after choppy session

 

 

Soybean futures on the Chicago Board of Trade ended a choppy, two-sided session posting modest gains Wednesday as the market struggled to establish lasting direction after supply and demand reports failed to pack any surprises.

 

CBOT July soybeans settled 2 1/2 cents higher at US$12.46 and November soybeans finished 6 3/4 cents higher at US$10.79 1/4.

 

July soy meal settled US$5.60 higher at US$413.40 per short tonne. July soyoil finished 84 points lower at 38.61 cents per pound. In pit trades, speculative fund buying was estimated at 4,000 lots in soybeans and 1,000 lots in soymeal, Speculative funds were estimated net sellers of 2,000 lots in soyoil.

 

The market managed to carve out new nine-month highs, feeding off the recurring tight old crop fundamental scenario, as traders continued to add premium in an effort to ration demand, analysts said.

 

The U.S. Department of Agriculture trimmed its soybean ending stock forecasts for old and new crop marketing years, but the reductions fell within analyst expectations. USDA estimated U.S. 2008-2009 soybean ending stocks at 110 million bushels, down 20 million from the 130 million estimated in May. The USDA raised its export estimate by 10 million bushels and the crush by 10 million to account for the change. Analysts had anticipated an ending stock estimate in a range of 99 million to 130 million bushels.

 

However, the absence of any negative news in the report allowed futures to extend their uptrend, while light profit-taking and spread unwinding managing to generate pressure to promote a choppy theme, a CBOT floor broker said.

 

Traders eyed spreads for signs of exhaustion in the uptrend, while support from a demand rationing rally in soymeal provided underlying support, he added.

 

Outside markets provided mixed signals to futures, with early support from a weaker dollar helping lift prices to new highs, before a rebound in the dollar during the day applied pressure.

 

The July/November bull spread settled at US$1.68 a bushel, down from Tuesday's settlement of US$1.71 cents.

 

The DTN Meteorlogix weather forecast calls for moderate to heavy rain in the central U.S. crop areas, along with very cool temperatures. Heaviest rain will fall in the already-saturated southern and eastern Midwest during the next couple of days. This round of wet and cool weather will likely keep field work and planting slow, especially for the soybean crop.

 

On tap for Thursday, the U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate soybean sales for the week ended June 4 in a range of 200,000 to 300,000 metric tonnes. Soymeal export sales are seen between 75,000 and 125,000 tonnes, while soyoil sales are pegged between zero and 10,000 tonnes.

 

 

Soy Products

 

Soy product futures ended mixed, with oil and meal diverging over price direction on adjustments in the meal/oil spread relationship. Soymeal spiked to new 11-month highs, underpinned by a tight supply situation that is forcing participants add risk premium to prices in an effort to ration demand, analysts said. Tight nearby supplies and concerns about availability of inventories later this summer is keeping prices in a bullish uptrend.

 

Soyoil futures stumbled Wednesday, succumbing to speculative sales amid meal/oil spreading and bearish USDA ending stock forecasts showing ample domestic inventories, analysts said.

 

July oil share slipped to 31.81%, while the July soybean crush ended at 88 1/4 cents.