June 12, 2007

 

CBOT Soy Review on Tuesday: Rallies on speculative buys, weather concerns

 

 

Chicago Board of Trade soybean futures ended higher Monday, recouping most of Friday's losses on speculative buying tied to dry eastern Midwest weather forecasts.

 

July soybeans settled 8 1/2 cents higher at US$8.30, and November soybeans finished 9 cents higher at US$8.63 1/2. July soymeal settled US$4.00 higher at US$230.20 per short tonne. July soyoil ended 5 points higher at 35.42 cents a pound.

 

Weather forecasts pointing toward a moisture blocking ridge keeping dry eastern Midwest crop areas rain free during the next week served as the catalyst to encourage speculative buyers to add risk premium back into the market, analysts said.

 

Speculative led buying was a featured attraction, with technical momentum and spillover strength from sharply higher price moves in the neighboring wheat market keeping sellers on the run, analysts added.

 

Active contracts rallied to new contract highs, with advances accelerating once futures challenged and pierced through overhead resistance at previous highs. Otherwise, futures had few directive influences with neutral supply and demand and weekly export inspections reports quickly overlooked, a CBOT floor analyst said.

 

Meanwhile, the DTN Meteorlogix weather forecast said scattered showers are expected Tuesday night and again on Thursday. Temperatures will average above normal, with highs in the 80s and into the 90s Fahrenheit. In the eastern Midwest it will be mostly dry through Friday, and temperatures will be above normal. The six- to 10-day forecast has temperatures dropping, with rainfall in the normal range.

 

Crops in the Delta and Southeast are suffering from high temperatures and a lack of rain. The western and northern areas of the Delta and the Southeast may get some showers Monday, but rainfall totals this week will be negligible, and the forecast for the next 10 days is for temperatures to be in the above-normal range and precipitation in the below-normal range, Meteorlogix reports.

 

The U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EDT on Monday. Analysts anticipate U.S. soybean good to excellent crop ratings declining in a range 1 to 3 percentage points.

 

In pit trades, Citigroup and Man Financial each bought 1,000 July, UBS Securities bought 1,000 November, Tenco and Shatkin/Arbor bought 500 July, and JP Morgan bought 400 July. Penson GHCO sold 1,500 July and 1,500 November. Speculative fund buying was estimated at 7,000 contracts.

 

 

SOY PRODUCTS  

 

Soy product futures ended higher across the board, with soymeal gaining product share. Soymeal futures rallied to 3 1/2 month highs, benefiting from borrowed strength from soybeans, technical buying and the unwinding of soyoil/soymeal spreads, analysts said.

 

Soyoil futures ended modestly higher, managing to retrace early session losses on technical buying. Spillover weakness from sharp overnight declines in Asian palm oil futures, and smaller USDA projected soybean oil use for biodiesel for 2006-07 and 2007-08 amid returns to biodiesel production becoming less favorable due to higher vegetable oil prices, weighed on prices initially, traders said. However, the exhaustion of selling pressure and spillover strength from wheat and energy futures attracted speculative buying to recoup the early declines, traders added.

 

July oil share ended at 43.48% and the July crush ended at 66 cents.

 

In soymeal trades, UBS Securities bought 2,000 December. Fimat and RJ O'Brien each sold 500 December, and UBS Securities sold 400 July. Speculative fund buying was estimated at 3,000 lots.

 

In soyoil trades, Bunge Chicago bought 500 December, Tenco bought 300 July and 500 December, Rand Financial bought 800 July and UBS securities bought 500 December. Bunge Chicago sold 400 July and 300 December, and RJ O'Brien sold 500 July. Speculative fund buying was estimated at 3,000 lots.