June 19, 2007

 

CBOT Soy Review on Monday: Higher; extends uptrend on dryness issues

 

 

Chicago Board of Trade soybean futures ended higher Monday, extending the market's upward trend as dryness concerns for Midwest crops remain the underlying driver of prices.

 

July soybeans settled 8 cents higher at US$8.55 1/4, and November soybeans finished 8 1/4 cents higher at US$8.89. July soymeal settled US$2.40 higher at US$237.80 per short tonne. July soyoil ended 21 points higher at 36.09 cents a pound.

 

Weather is the keynote feature of the market at this point, with dryness expanding across the Midwest crop belt and only limited rain chances in store for this week, enticing participants to add risk premium to prices, analysts said.

 

"Its kind of a broken record at this point, with weather issues, strength in outside markets and technical momentum featured attractions once again," a CBOT floor analyst said.

 

Outlooks for crop condition ratings to decline in this afternoon's updates and the need for general rains in the eastern belt kept prices underpinned throughout, traders said.

 

Nevertheless, the inability of futures to challenge overnight highs, and reports of scattered showers moving east across the Midwest managed to apply mild pressure to limit advances and attract light profit taking, traders added.

 

The DTN Meteorlogix weather forecast keeps a pattern of hot and dry weather in place over the eastern Midwest during the first half of this week. In addition, extended forecast charts point to a threatening upper-atmosphere ridge of high pressure sprawling across the region in the next six to 10 days.

 

The presence of the upper-atmosphere high is ominous for its potential to continue the trend of above normal temperatures and below-normal precipitation. With much of Indiana and all of Ohio now classified as at least abnormally dry in the weekly Drought Monitor, and southeastern Indiana and southern Ohio listed in a moderate drought category, this situation becomes critical for its adverse impact on row crop conditions, Meteorlogix reports.

 

The U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EDT on Monday. Analysts anticipate U.S. soybean good-to-excellent crop ratings declining in a range 2 to 5 percentage points.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.

 

 

SOY PRODUCTS

  

Soy product futures ended higher across the board, up in unison with soybeans. Soymeal futures gained ground against soyoil futures once again, buoyed by speculative buying, spillover from soybeans and a mild correction in the soyoil/soymeal spread, analysts said. The nearby July future traded to its highest level since Feb. 26.

 

Soyoil futures ended on firm footing, supported by light spec buying, with strength in world vegoils markets and crude oil futures underpinning prices, analysts said. Nevertheless, the market continued to consolidate from recent price moves, analysts added.

 

July oil share ended at 43.14%, and the July crush ended at 65 cents.

 

In soymeal trades, Fimat and RJ O'Brien each bought 300 December, and UBS Securities bought 400 July and 300 December. Sellers were light scattered among various firms. Speculative fund buying was estimated at 2,500 lots.

 

In soyoil trades, Penson GHCO bought 600 December, Fimat bought 400 July, and JP Morgan bought 300 July and 300 August. Bunge Chicago sold 500 July, and Shatkin/Arbor sold 500 July and 300 December. Speculative fund selling was estimated at 2,500 lots.