June 18, 2009

 

CBOT Soy Review on Wednesday: Climb; speculative short cover, fundamentals

 

 

Chicago Board of Trade soy futures settled higher Wednesday, climbing after trading on either side of unchanged levels on speculative short covering, technical buying and underlying fundamental strength.

 

CBOT July soys settled 5 cents higher at US$12.06 1/4 and November soys finished 21 1/2 cents higher at US$10.50. In pit trades, speculative fund buying was estimated at 4,000 lots.

 

July soy meal settled US$3.90 lower at US$400.40 per short tonne. July soyoil finished 14 points higher at 37.10 cents per pound.

 

The consolidation of recent losses remained a featured attraction, as the absence of fresh news and a lack of definitive movement in outside markets kept technical factors in play, analysts said.

 

The market experienced a short covering rally, gaining strength after downside pressure failed to attracting follow through selling. "The lack of sell paper attracted some speculative buying, with advances gaining momentum after most active November futures filtered into a gap left on technical charts from Monday," a CBOT floor analyst said.

 

Meanwhile, tight old crop stocks and worries about the availability of early new crop soy supplies in the southern Midwest and Delta due to planting delays provided underlying fundamental support.

 

Otherwise, activity was choppy, with upside potential limited by cautious activity ahead of key June 30 crop reports and worries of further Chinese sales cancellations in Thursday's weekly export sales report, analysts said.

 

The unwinding of old/new crop bull spreads remained a feature, as traders exit July futures heading toward the delivery period.

 

The July/November bull spread settled at US$1.56 a bushel, down from Tuesday's settlement of US$1.72 3/4 cents.

 

The DTN Meteorlogix weather forecast said rainfall of 2-plus inches is pegged for the northern and eastern Midwest during the next five days, with rains of 1-plus inch in the southern Midwest and Ohio valley.

 

On tap for Thursday, the U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended June 11 in a range of 50,000 to 350,000 metric tonnes. Soymeal export sales are seen between 50,000 and 200,000 tonnes, while soyoil sales are pegged between zero and 15,000 tonnes.

 

 

Soy Products

 

Soy product futures ended mostly higher, continuing its consolidation theme in unison with soys. Soymeal futures followed the lead of soys, but the unwinding of bull spreads and base liquidation in the July future dropped the nearby contract into negative territory, analysts said.

 

Soyoil futures were pulled higher in step with the rest of the soycomplex, benefitting from the unwinding of meal/oil spreads and a lack of spillover pressure from crude oil futures.

 

July oil share slipped to 31.64%, while the July soy crush ended at 82 1/4 cents.