July 2, 2009

 

CBOT Soy Review on Wednesday: Spike; bullish fundamentals, outside support

 

 

Chicago Board of Trade soy futures soared to two-week highs Wednesday, spiking on bullish underlying fundamentals and supportive outside influences.

 

CBOT July soys settled 32 1/4 cents higher at US$12.58 1/2 and November soys finished 34 1/2 cents higher at US$10.15 1/2. In pit trades, speculative fund buying was estimated at 6,000 lots in soys, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

July soy meal settled US$5.90 higher at US$418.20 per short tonne, and December soymeal ended US$9.40 higher at US$315.70. December soyoil finished 80 points higher at 36.70 cents per pound.

 

Tight old crop inventories and outlooks for the supply situation to carry on into the 2009-10 market year despite record planted acreage in 2009, served as a rallying point to lift futures, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Weather is turning into a dominant issue for emerging crops following Tuesday's acreage report, and with the uncertainty of future weather sellers ran for cover, traders said.

 

Weather models have started to build heat into the central U.S. next week, and with an extended holiday weekend approaching, market shorts have all the risks, said Hannagan.

 

Outside financial markets added strength for most of the day. Tight supplies and strong demand is leaving little room for error with new crop production and serves to keep premium in the market, Hannagan added.

 

Meanwhile, light unwinding on July positions and profit taking on bulls spreads were featured despite strong across the board.

 

The July/August spread settled at a 98 cent inverse Wednesday, and the July/November spread settled at a US$2.43 inverse.

 

On tap for Thursday, the U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended June 18 in a range of 100,000 to 425,000 metric tonnes. Soymeal export sales are seen between 75,000 and 300,000 tonnes, while soyoil sales are pegged between zero and 60,000 tonnes.

 

 

Soy Products

 

Soy product futures rallied in unison with soys. Soymeal rose to 2-week highs on bullish fundamentals and speculative short covering following recent declines. Soyoil climbed with the rest of the complex, feeding off the unwinding of some meal/oil spreads and early strength from crude oil.

 

July oil share slipped to 29.93%, while the July soy crush ended at 58 cents.