June 24, 2009

 

CBOT Soy Review on Tuesday: Higher as dollar plunge sparks upward movement

 

 

Soy futures on the Chicago Board of Trade rose Tuesday, retracing Monday's losses on speculative-led buying tied to a sharp slide in the U.S. dollar.

 

CBOT July soys settled 27 1/2 cents higher at US$11.79, and November soys finished 23 1/2 cents higher at US$10.04 1/2. In pit trades, speculative fund buying was estimated at 4,000 lots in soys, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

July soymeal settled US$11.50 higher at US$388.50 per short tonne. July soyoil finished 100 points higher at 36.93 cents per pound.

 

The rally Tuesday was dollar-related, with the drop in the greenback attracting buyers after the market fell aggressively Monday when the dollar was firm, said Gavin Maguire, director of research at e-Hedger in Chicago.

 

Scattered bargain buying was featured as well, with technically oversold market conditions pulling speculative buyers off the sidelines. Advances accelerated once the most active November contract climbed above major moving average resistance at the contract's 50-day moving average.

 

The market was overdue for a bounce, after a recent slide produced 88-cent losses in the July contract and declines of 85 1/4 cents in the November contract from June 11 to Monday's settlements.

 

Meanwhile, old crop futures continued to draw support from tight supplies, while new crop futures garnered some strength from concerns surrounding lagging planting progress in the southern Midwest and Delta.

 

Nevertheless, in the absence of fresh news, outside market influences will remain a driver of prices.

 

The DTN Meteorlogix weather forecast calls for Midwest soys to benefit from warmer to hot temperatures and periodic thundershower activity this week. This may also be a better weather pattern for the final planting effort for soys.

 

In the Mississippi Delta, a recent drier and hotter trend for this region should continue during the week. High temperatures will range between 95 and 100 degrees Fahrenheit during the next five days. Soils will dry out and stress to soys increase, Meteorlogix said.

 

 

Soy Products

 

Soy product futures soared in unison with soys, bouncing back from Monday's declines on technical buying and outside market support. Soymeal futures recouped some product share value on the climb, with the plunge in the dollar a key influence, analysts said. Soyoil futures rose in step with the rest of the complex, with a jump in crude oil futures serving as the catalyst for a late-session bounce in the market, traders said.

 

July oil share slipped to 32.22%, while the July soy crush ended at 82 cents.