June 26, 2009

 

CBOT Soy Review on Thursday: Mixed; old crop bounce on tight stocks

 

 

Chicago Board of Trade soy futures ended mixed Thursday, with nearby contracts advancing at the expense of deferred month futures amid the tight availability of old crop stocks.

 

CBOT July soys settled 11 cents higher at US$11.96 and November soys finished 6 cents lower at US$10.02. In pit trades, speculative fund selling was estimated at 4,000 lots in soys, and 1,000 lots each in soymeal. Fund buying was estimated at a net 1,000 lots in soyoil.

 

July soy meal settled US$4.80 higher at US$397.30 per short tonne. July soyoil finished 10 points higher at 36.54 cents per pound.

 

Old crop soys outperformed their counterparts in neighboring grain futures, as tight nearby supplies buoyed the front end of the market, said Bill Nelson, analyst with Doane Advisory Services in St. Louis.

 

Farmers are holding the last portion of 2008 inventories tightly, forcing the market to bid up for the supplies, reflective of firm Gulf and Midwest cash basis levels, Nelson said.

 

Underlying export demand for soymeal added to the bullish old crop theme. New crop futures stumbled and lost ground on old/new crop spreads, as favorable near-term weather for final planting and crop development as well as outlooks for a jump in soy acreage projections weighed on new crop futures.

 

The DTN Meteorlogix weather forecast calls for Midwest crops to benefit from continued warm but less-hot temperatures going into the end of the week. Some periodic thundershower activity will bring additional soil moisture, mostly to northern areas. In addition, recent trends are favorable for the final planting effort for soys in Illinois, Meteorlogix said.

 

Meanwhile, crops in the southern Midwest and Delta continue with a stressful hot and dry weather pattern. This trend should continue during the next few days. High temperatures of 95-100 Fahrenheit during this time frame will dry out soils, and increase stress to soys. Temperatures return to more seasonal levels during the first part of next week, with a few scattered showers developing, Meteorlogix forecasts.

 

On tap for Friday, options on July futures expire.

 

U.S. Department of Agriculture is scheduled to release its 2009 acreage and quarterly grain stocks reports Tuesday. The average of 15 analyst estimates peg 2009 soy acreage at 78.305 million acres. The figure is above USDA's March 31 prospective plantings estimate at 76.024 million, and 2008's 75.718 million.

 

 

Soy products 

 

Soymeal futures ended mixed, in tune with the direction of soy prices. Underlying demand for soymeal served as the catalyst to support old crop futures. Strong weekly export sales for meal managed to overshadow hefty meal stocks found in the Census crush report, said Bill Nelson. Export shipments have exceeded their five-year average for the last 14 weeks, and that shows there is demand for any build-up in stocks, Nelson added.

 

Soyoil futures edged higher, but lost product share on meal/oil spreads. The market garnered support from higher crude oil futures, but meal demand served as a spark for an adjustment in the meal/oil spread relationship, analysts said.

 

July oil share slipped to 31.5%, while the July soy crush ended at 80 cents.