June 27, 2009

 

CBOT Soy Review on Friday: Mixed; bull spreads dominate action

 

 

Chicago Board of Trade soy futures ended mixed Friday, with old crop futures trending higher while new crop contracts retreated on spreads.

 

CBOT July soys settled 5 cents higher at US$12.01 and November soys finished 11 cents lower at US$9.91. In pit trades, speculative fund selling was estimated at 4,000 lots in soys, and 2,000 lots in soyoil.

 

July soy meal settled US$7.70 higher at US$405.00 per short tonne. July soyoil finished 46 points lower at 36.08 cents per pound.

 

"The soy market was dominated by bull spreads in both soys and soymeal, as tight availability of old crop physical supplies served as the catalyst to propel bull spreads to new highs," said Greg Wagner, analyst with AgResource Co. in Chicago.

 

The July/November soy bull spread differential settled at US$2.10 inverse, widening from Thursday's close of US$1.94.

 

New crop contracts were confronted with a two-fronted attack on prices, Wagner said. Good weather conditions for late plantings and crop development and larger seeding outlooks for Tuesday's acreage report weighed on the back end of the market, he added.

 

Bull spreading was the featured attraction in an otherwise quiet news front, with the nearby July future gravitating toward the US$12.00 options strike price as options on July futures expired Friday.

 

The mixed tonnee is expected to remain the characteristic of the soy market heading into Tuesday's key acreage and quarterly stocks reports, as old and new crop fundamentals diverge. Nearby futures will continue to draw support from tightening supplies in the face of solid underlying demand, Wagner said.

 

The U.S. Department of Agriculture is expected to show a moderate increase in soy acreage from its March prospective plantings report with soy stocks as of June 1 reflecting solid third-quarter usage in its reports scheduled for release Tuesday 8:30 a.m. EDT (1230 GMT).

 

Analysts surveyed by Dow Jones Newswires estimate soy acreage at 78.305 million acres, up 2.281 million acres from the March projection of 76.024 million. The estimates from the 18 analysts surveyed ranged between 75.300 and 79.631 million acres. USDA is expected to report soy stocks at 586 million bushels in its quarterly Grain Stocks report.

 

The DTN Meteorlogix weather forecast calls for generally favorable Midwest weather conditions for developing soys to continue during the next seven to 10 days. Some disruptions to the remaining soy planting including double cropped soy planting after the wheat harvest could continue, although not to the degree seen earlier in the season, Meteorlogix said.

 

 

Soy Products

 

Soy futures finished mixed, with bull spreading featured. Meal bull spreads rallied to new highs, with old crop contracts supported by concerns about the availability of high protein meal, with strong underlying export demand underpinning factors, analysts said.

 

Soyoil futures stumbled, succumbing to meal/oil spreading. Soyoil was the weak link in the soy complex, with weakness from crude oil future's slide adding pressure to pin prices in negative territory, Wagner said.

 

July oil share slipped to 30.78%, while the July soy crush ended at 87 cents.