June 17, 2009

 

CBOT Soy Review on Tuesday: End up; consolidates recent setback

 

 

Soy futures on the Chicago Board of Trade ended higher Tuesday, but well off earlier highs, as the market consolidated after sharp declines in previous sessions.

 

CBOT July soys settled 4 1/4 cents higher at US$12.01 1/4 and November soys finished 3 3/4 cents higher at US$10.28 1/2.

 

July soy meal settled US$1.00 lower at US$404.30 per short tonne. July soyoil finished 34 points higher at 36.96 cents per pound. In pit trades, speculative funds were net buyers of 2,000 lots in soys and 1,000 lots in soyoil. Fund selling was estimated at 1,000 lots in soymeal.

 

Weakness in the U.S. dollar served as a spark to lift prices initially, but after outside market support eased, the rally ran out of steam, leaving futures in a consolidation phase, with two-sided activity featured, said John Kleist, broker/analyst with Allendale Inc.

 

Base liquidation in the July future applied pressure during the day, but tight old crop stocks and underlying demand remained supportive features keeping a floor beneath prices.

 

Nevertheless, the absence of new bullish news left traders taking a cautious approach, as the trade looks ahead to key June 30 stocks and acreage reports and weather conditions for guidance, Kleist said.

 

Weather conditions are promoting mixed signals for prices, with weather delightful for most of central U.S. growing areas, while southern areas are in need of a drying period to get the remainder of the crop planted.

 

The July/November bull spread settled at US$1.72 1/2 a bushel, up marginally from Monday's settlement of US$1.72 1/4 cents.

 

The DTN Meteorlogix weather forecast calls for heavy rain in the southern Midwest to continue through Tuesday into Wednesday. Rains of up to 2 inches, with locally heavier rain totals of 4 inches or greater, will cause flooding across Missouri through the southern half of Illinois. This heavy rain threatens to wash out crops that have been planted, cause some acreage abandonment, and limits the prospect for double-crop soy acreage due to extensive delays in harvest soft red winter wheat.

 

 

Soy Products

 

Soy product futures ended mixed, with spreading between the products a featured attraction. Consolidation in soymeal remained a featured attraction, as the market looked for direction in the absence of fresh fundamental news following corrective sales in the past two trading days, analysts said.

 

Soyoil futures ended higher, climbing on a combination of meal/oil spread unwinding and support from higher crude oil futures.

 

July oil share slipped to 31.41%, while the July soy crush ended at 94 3/4 cents.