June 16, 2007

 

CBOT Soy Review on Friday: Weather, speculative buys send prices soaring

 

 

Chicago Board of Trade soybean futures ended sharply higher Friday; rallying to new contract highs on speculative buying, with weather concerns the underlying driver of the market.

 

July soybeans settled 19 3/4 cents higher at US$8.47 1/4, and November soybeans finished 19 3/4 cents higher at US$8.80 3/4. July soymeal settled US$5.00 higher at US$235.40 per short tonne. July soyoil ended 72 points higher at 35.88 cents a pound.

 

Ninety percent of the pricing influence in the market is weather at this point, and with only marginal amounts of moisture expected to move through the Midwest next week, followed by a potential moisture blocking ridge forming in the region, traders added risk premium to prices, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Weather was the central focus of the market, with technically inspired buying featured as well. Advances accelerated once active futures pushed through chart resistance at previous contract highs, analysts said.

 

Bullish momentum filled the soy complex, with spillover strength from soyoil aiding soybeans upward push, traders added.

 

Nevertheless, the central focus of the market was adding price premium despite forecasts for light showers to move into the Midwest early next week. The trade has seen showers dissipate as they move east across the crop belt previously, so the market refused to sell off just on the anticipation of rain, Hannagan added.

 

The DTN Meteorlogix weather forecast calls for generally dry weather in the U.S. Midwest through the weekend. A few light rain showers in northern areas -Minnesota and Wisconsin - will be the only occurrences of rainfall. In addition, temperatures will range from 88 to 93 Fahrenheit for daytime highs through Monday. This will be a stressful weather pattern for corn and soybeans, notably from the Mississippi River eastward. 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, with southeastern Indiana and southern Ohio now listed in a moderate drought category, Meteorlogix reports.

 

During next week, a round of light to moderate rain will bring up to one inch of moisture to the western Midwest, but no more than three-quarters of an inch with scattered coverage in the eastern Midwest. The crop weather pattern remains stressful going into the last half of June, Meteorlogix said.

 

In pit trades, Man Financial bought 1,000 November, Tenco, Term Commodities, Fimat and Rand Financial each bought 500 November, and ADM Investor Services bought 400 July. Sellers were scattered among various commission houses. Speculative funds were estimated buyers of 6,000 contracts.

 

 

SOY PRODUCTS

  

Soy product futures ended Friday's session posting strong gains, up in unison with soybeans. Soyoil futures were the upside leader fro most of the day, with speculative buying helping extend the market's recovery from previous losses, with spillover from overnight price strength in Asian palm oil futures opening the door for the gains, analysts said.

 

Soymeal futures rallied to multi month highs, with speculative buying featured as dryness and crop issues in soybeans spilled over to lift prices to their highest levels since February 28, analysts said.

 

July oil share ended at 43.25% and the July crush ended at 65 1/4 cents.

 

In soymeal trades, Fimat bought 600 December, and Fortis bought 300 December. Sellers were lightly scattered among various commission houses. Speculative fund buying was estimated at 2,000 contracts.

 

In soyoil trades, JP Morgan bought 400 July, Bunge Chicago, Citigroup, and Fimat each bought 300 July. JP Morgan sold 300 July and 500 August, and Rand Financial sold 600 July. Speculative fund buying was estimated at 3,000 lots.