June 28, 2008

 

CBOT Soy Review on Friday: Mixed; tight stocks support nearbys

 

 

Chicago Board of Trade soybean futures ended mixed Friday, with old-crop futures firm on tight supplies, while new-crop contracts retreated on pre-weekend and crop-report position evening.

 

July soybeans settled 7 1/4 cents higher at US$15.81 1/2 and November soybeans ended 2 cents lower at US$15.59 1/2. December soymeal settled US$4.00 higher at US$409.70 per short tonne. December soyoil finished 10 points lower at 67.36 cents per pound.

 

The market took on a mixed tonnee, with nearby futures higher, reflective of tight supplies, and outlooks for supportive crop report data from U.S. Department of Agriculture Monday, analysts said.

 

New-crop futures backpedaled off initial advances, pressured by pre-weekend and crop-report positioning, as traders reduced some risk amid the uncertainties of 2008 acreage and weather, analysts added.

 

However, futures remain firmly underpinned by bullish long-term outlooks toward supply and demand, with the supportive influence of outside inflationary markets containing downside risks, traders said.

 

The market has all the trappings of a historically tight supply situation and that continues to feed bullish enthusiasm, traders added. Nevertheless, futures ended off early gains, losing upside momentum after nearby futures failed to challenge all-time highs, a CBOT broker said.

 

Overall activity was rather subdued despite the price moves, as traders took a cautious approach as they look ahead to Monday's crop report, next week's weather and first notice day for July futures contracts.

 

The DTN Meteorlogix forecast calls for an active weather pattern to remain in place over the region. There will be frequent periods with thunderstorms and only minor, one- to three-day periods, of drier weather. Some heat will occur ahead of weather systems, but also some fairly cool conditions are in store behind the systems. Flooding will continue to be a risk, along with possible quality problems.

 

There is no notable change to the weather pattern over the central U.S. as the month of July approaches. Midwest temperatures will be near to below normal, with rainfall totals continuing near to above normal, Meteorlogix forecasts.

 

Looking ahead, the U.S. Department of Agriculture is expected to show a modest decrease in soybean seedings from its March prospective plantings report with soybean stocks as of June 1 reflecting solid third-quarter usage in its reports scheduled for release at 8:30 a.m. EDT (1230 GMT) Monday.

 

Analysts surveyed by Dow Jones Newswires estimate average soybean acreage at 74.203 million acres, down 590,000 acres from the March projection of 74.793 million. The estimates from the 18 analysts surveyed ranged between 71.965 and 76.000 million acres.

 

USDA is expected to report soybean stocks at 669 million bushels in its quarterly Grain Stocks report. Estimates ranged from 615 million to 743 million. Stocks as of March 1 totaled 1.428 billion.

 

Meanwhile, deliveries against the Chicago Board of Trade July soybean and soymeal contracts on first notice day Monday are expected to remain light, while soyoil notices have the potential to be large, analysts said.

 

Analysts expect deliveries against the CBOT July soybean contract to fall in a range of zero to 500 lots, with most analysts leaning toward a range of zero to 200 lots. Soymeal deliveries are seen between zero and 200 lots, while soyoil delivery notices are expected in a range of 1,000 to 3,000 contracts.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 1,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal futures setting new contract highs. Soymeal was buoyed by strong underlying demand, with tight stocks, the uncertainty of new-crop soybean production potential and supportive outside inflationary markets aiding the advances, analysts said.

 

Soyoil futures stumbled, succumbing to profit-taking pressure, with meal/oil spreading weighing on prices as well, analysts said.

 

December oil share ended at 45.12% and the November/December crush ended at 82 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 1,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 1,000 lots.