June 15, 2007

 

CBOT Soy Review on Thursday: Climbs; but backs off earlier gains

 

 

Chicago Board of Trade soybean futures ended higher Thursday, but well off earlier highs, as weather uncertainties limited the aggressiveness of speculative buyers, analysts said.

 

July soybeans settled 1 3/4 cents higher at US$8.27 1/2, and November soybeans finished 1 1/4 cents higher at US$8.61. July soymeal settled US$0.40 higher at US$230.40 per short tonne. July soyoil ended 29 points higher at 35.16 cents a pound.

 

Dryness concerns for eastern Midwest crops, coupled with spillover support from wheat and soyoil provided underlying strength to lift prices, said Don Roose, president of US Commodities in West Des Moines, Iowa.

 

However, the inability of nearby contracts to pierce through double top resistance on technical charts, and the market's respectfulness of the potential for rain to emerge from a front forecasted to move into the Midwest early next week provided pressure to cap off upside movement, Roose added.

 

Soybeans were an under achiever in relation to the gains seen in wheat, illustrating the uncertainties of crop weather, but if current conditions hold true, crop ratings should slide next week, a CBOT floor analyst said.

 

Nevertheless, bullish near term weather issues, and an absence of bearish features to attract aggressive selling managed to keep prices in positive territory throughout the day.

 

The DTN Meteorlogix weather forecast calls for dry weather through Sunday east of the Mississippi River. Temperatures will be above normal, ranging from 88 to 93 Fahrenheit for daytime highs through Monday. A few light showers will develop late Monday and Tuesday of next week, but rainfall will total no more than one-half inch. Almost the entire eastern Midwest - notably the southern two-thirds of Illinois, all of Indiana and all of Ohio - now are classified as at least "abnormally dry" in the weekly Drought Monitor. Southeastern Indiana and southern Ohio are now listed in a "moderate drought" category. Soil moisture is diminishing, and the onset of very warm temperatures threatens to cause crop stress.

 

Meanwhile, mid to late next week brings no change in the weather pattern. The persistent dry outlook remains in effect for the eastern region of the U.S. corn belt, Meteorlogix reports.

 

In pit trades, Penson GHCO bought 600 July, Bunge Chicago bought 400 July, and RJ O'Brien bought 300 July. Man Financial sold 500 July, and RJ O'Brien sold 300 July. Speculative fund buying was estimated at 3,500 contracts.

 

  

SOY PRODUCTS

   

Soy product futures ended mostly higher, with soyoil the upside leader. Soyoil futures were buoyed by spillover strength from gains in Malaysian palm oil and energy futures, analysts said. The borrowed momentum enabled futures to score a technical rebound, as the market readjusted the product spread relationship, before speculative buying diminished, analysts added.

 

Soymeal futures ended modestly higher, recovering from earlier declines. An adjustment of the soyoil/soymeal relationship weighed on prices for most of the day, with soymeal losing ground to soyoil amid strength in world vegoil markets, analyst said.

 

July oil share ended at 43.28% and the July crush ended at 66 1/4 cents.

 

In soymeal trades, JP Morgan bought 500 July and Fimat bought 600 July. Fimat sold 700 December, Tenco and Rosenthal each sold 600 July, Bunge Chicago and Penson GHCO each sold 300 July, and Man Financial sold 300 December. Speculative funds were estimated net sellers on the day.

 

In soyoil trades, Tenco bought 1,200 July, Fimat bought 700 December, JP Morgan bought 400 July, Bunge Chicago and Rosenthal each bought 300 July. Fimat sold 600 July, UBS Securities sold 400 July and Rand Financial sold 300 July. Speculative fund buying is estimated at 3,500 lots.