July 3, 2007

 

CBOT Soy Review on Monday: Settles up; extends Friday's bullish theme

 

 

Chicago Board of Trade soybean futures ended higher across the board Monday, extending to new contract highs on carryover momentum from Friday's acreage inspired price spike.

 

July soybeans settled 15 cents higher at US$8.65, and November soybeans finished 16 cents higher at US$8.97 3/4. July soymeal settled US$6.60 higher at US$235.80 per short tonne. July soyoil ended 10 points higher at 36.73 cents a pound. The market extended Friday's bullish theme, as the industry continued to factor in a tighter 2007-08 balance sheet, with smaller acreage increasing the importance of every bushel produced in 2007, a CBOT floor analyst said.

 

Prices briefly rallied to new highs, feeding off the acreage momentum, as traders look for prices to reach levels that will not only ration demand but also buy some additional U.S. and South American soy acres for 2008, he added.

 

The theme was consistent, with concerns over potential dryness in the Midwest providing a midday bounce to new highs, traders said. The bullish longer range outlook attracted commercial and speculative buying to keep prices firmly planted in positive territory.

 

However, a lack of follow through momentum at the highs did uncover some profit-taking measures to cap upside movement, a cash connected CBOT broker added.

 

The DTN Meteorlogix forecast said eastern Midwest crop areas will have favorable temperatures and some periodic showers this week. Normal to below-normal temperatures in addition to periodic rain showers are forecasted. In the western Midwest, a possibly stressful weather pattern of dry and very warm conditions is developing. June was a notably dry month from Des Moines, Iowa, west. Besides the dry weather pattern, temperatures will generally be normal to above normal during this week. Soil moisture will be rapidly drawn down, Meteorlogix reports.

 

The U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EDT on Monday. Analysts anticipate U.S. soybean good-to-excellent crop ratings rising in a range 1 to 3 percentage points.

 

Meanwhile, CBOT raised its minimum margins for soybeans, mini soybeans, soymeal and soyoil, exchange officials said Monday. Soybean margins were raised to US$1,823, up from US$1,215. The changes are effective Tuesday.

 

In pit trades, FCStonnee bought 2,000 November, JP Morgan bought 1,000 November, Rand Financial bought 400 November, and ADM Investor Services and Rosenthal each bought 300 November. Fimat sold 4,500 November, and JP Morgan, RJ O'Brien and Rand Financial each sold 300 November.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, feeding off the supportive theme in soybeans. Soymeal futures were the upside leader of the products, with borrowed strength from soybeans and worries over tighter soybean supplies for processors in 2007-08 serving as the catalysts for the gains, analysts said.

 

Soyoil futures settled higher, buoyed by spillover strength from soybeans and overnight price strength in Asian palm oil futures. However, futures lost product share to soymeal on spreads as tighter soy inventories are seen having a greater effect on soymeal amid abundant soyoil inventories, analysts said.

 

July oil share ended at 43.78% and the July crush ended at 57 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with Man Financial buying 500 December, Rosenthal buying 300 December, RJ O'Brien selling 500 December, and Fimat selling 300 December. Speculative fund buying was estimated at 4,000 contracts.

 

In soyoil trades, Bunge Chicago bought 300 December, and Fimat bought 300 August. JP Morgan sold 400 December, Fimat sold 600 December, and Man Financial and RJ O'Brien each sold 500 December.