June 13, 2006

 

CBOT Soy Review on Monday: Up sharply; weather concerns buoy market

 

 

Chicago Board of Trade soybean futures ended sharply higher Monday, as the market added risk premium back into prices amid weather forecasts calling for warmer and drier conditions during the next week to 10-days.

 

July soybeans ended 14 1/4 cents higher at US$6.00, July soymeal settled US$4.60 higher at US$181.20 a short tonne, while July soyoil ended 44 points higher at 25.30 cent a pound.

 

Weather concerns were the primary driver of prices, with technically motivated buying adding strength to keep futures firmly planted in positive territory, said a CBOT commission house broker.

 

The market climbed to a 1-week high, with the ability of the July future to push through meaningful overhead resistance levels uncovering pre-placed buy orders. The technical aspect of the market played a key role, but the nervousness associated with potential weather threats remained the key driver, analysts said.

 

A drier-than-average weather pattern is on tap for the Midwest in the next week to 10-days, said John Dee, meteorologist with Global Weather Monitoring in Lake Linden MI. Heading in the week, weather models are showing temperatures in the Midwest will be a little above normal in the upper 80s Fahrenheit to the low 90s F, said Dee.

 

The temperatures are not going to be a major problem, but the lack precipitation particularly in parts of the western Midwest where moisture is needed is an area that will be watched closely for signs of a weather pattern change that could lead into the critical parts of the growing season, Dee added.

 

After the close, U.S. Department of Agriculture is scheduled to release its weekly crop progress report 4:00 EDT (1500 GMT). Analysts anticipate soybean crop ratings will come in steady to slightly lower. USDA said 70% of the U.S. soybean crop was in good-to-excellent shape in last week's report

 

In pit trades, ABN Amro bought 1,500 July, ADM Investor Services, Calyon Financial, Citigroup, Goldenberg Hehmeyer, and Man Financial each bought 500 July, Iowa Grain bought 400 July. Commodity fund buying was estimated near 3,000 contracts.

 

On the sell side, Term Commodities sold 1,000 July, Fimat sold 700 July, Bunge Chicago, ABN Amro and Tenco each sold 500 July. South American soybean futures ended higher, with the July future settling 9 1/4-cent higher at US$6.21 3/4.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, uniformly climbing in step with the strong gains is soybeans. Soymeal was buoyed by technical buying, but without any fresh fundamental support, futures found it hard to aggressively push above session highs as soybeans trimmed gains late.

 

Soyoil futures had a similar fate to soymeal, scaling back earlier gains with weakness in crude oil futures applying mild pressure to cap upside movement.

 

July oil share ended at 41.11%, and the July crush ended at 77 cents.

 

In soymeal trades, Calyon Financial, Citigroup, O'Connor and Kottke each bought 500 July, Man Financial bought 400 July and Fimat bought 300 July. Sellers were scattered among various commission houses. Speculative fund buying was estimated near 3,000 lots.

 

In soyoil trades, Rand Financial and Fortis each bought 1,000 July, Fimat bought 600 July, Calyon Financial and JP Morgan each bought 500 July. O'Connor sold 1,600 July, with scattered selling reported from various commission houses. Speculative fund buying was estimated near 3,000 lots.