June 18, 2009
CBOT soy to remain nervous this summer
Supply worries will keep Chicago Board of Trade soy futures on "pins and needles" this summer and should push prices above recent highs, FCStone's vice president of operations said Wednesday (June 17).
Nearby CBOT soy will likely trade within a range of US$12 a bushel to US$13 this summer, with solid support seen from US$11.50 to US$12, said David Smoldt, vice president of operations for the firm. He spoke at the FCStone/Downes-O' Neill Outlook Conference in Chicago.
Although prices will remain strong, it's unlikely soy will return to all-time highs set last summer, unless the US is hit with a weather disaster like a full-fledged drought, Smoldt said. That is not expected to happen.
Soy have rallied this spring following a severe drought in Argentina, which shifted demand to the US Nearby July soy ended Wednesday at US$12.06 1/4.
The tight old-crop soy carryout will probably lead some crushing plants to cut hours this summer, Smoldt said. The US Department of Agriculture this month estimated carryout at 110 million bushels, which Smoldt said is about a 12-day supply.
"The margins are there," he told Dow Jones Newswires in an interview on the sidelines of the conference. "It's just the beans won't be there."
New-crop November soy could trade around US$7.50 to US$8 at harvest time, Smoldt said. The contract on Wednesday ended at US$10.50.
As for corn, the nearby CBOT contract has support around $4 until the market gets a better handle on acres, Smoldt said. The USDA is set to issue its acreage report June 30.
Nearby corn could potentially return to its recent high around US$4.50 or, if the crop avoids weather problems this summer, it could fall to US$3.50, Smoldt said. It would take a "pretty big weather problem" to spark a rally to US$5.25, he said.
In general, US$4.50 to US$5 is the top range for corn this summer, Smoldt said. The floor for the fall is around US$3, he said.
Nearby July corn closed Wednesday at US$4.07 3/4. December corn ended at US$4.28 3/4.
There is a 40 percent chance corn, which has a more comfortable supply situation that soy, won't beat recent highs this summer, Smoldt said. There is only a 15 percent chance soy have seen its highs, he said.
