July 11, 2006

 

CBOT Soy Review on Monday: Up but well off highs; weather underpins

 

 

Chicago Board of Trade soybean futures ended modestly higher Monday, recovering from a midday slide, as weather-related concerns continue to underpin prices.

 

July soybeans ended 1 cent higher at US$6.03, November soybeans finished 2 cents higher at US$6.29 3/4, December soymeal settled US$0.50 higher at US$178.90 a short tonne, and December soyoil ended 15 points higher at 28.26 cent a pound.

 

Mid- and longer-range weather models showing the potential for crop- threatening heat and dryness to move into the Midwest served as the catalyst for the gains, with traders adding some premium to prices with spillover momentum from corn aiding the advances as well, analysts say.

 

However, with less sense of urgency to build weather premium in soybeans compared to corn, futures retraced early advances, as soybeans remain several weeks away from their critical pod filling stage of development, said John Kleist of Kleist Agricultural Consulting.

 

Choppy activity plagued futures, with the market's inability to challenge overnight e-CBOT highs as well as last week's high marks attracting speculative selling to briefly drop prices into negative territory. The defensive tonnee was aided by light commercial selling and favorable near-term weather conditions, with cooler and rainy conditions expected to filter across the Midwest through midweek.

 

There is a little reluctance in the market to add any significant premium to prices, as speculative funds have not shown a propensity to develop a long position, said Kleist. Meanwhile, underlying strength is attributed to expected declines in crop ratings and tighter balance sheet projections for Wednesday's supply and demand report, analysts added.

 

A rain system moving into the Midwest is expected to produce rain totals of 1/2 to 1 3/4 inches and up to four inches locally, according to Don Keeney, agricultural meteorologist for Cropcast Weather Service. Rain will be heavier in northeast Illinois and Northern Indiana and Northern Ohio, moving to the southeast corn belt through Wednesday, and lingering in the south and far northern Midwest Thursday and Friday, he added.

 

After the close, USDA is scheduled to release its weekly crop progress report 4 p.m. EDT (1500 GMT). Analysts anticipate soybean crop ratings will come in 1 to 3 percentage points lower. USDA said 64% of the U.S. soybean crop was in good-to-excellent shape in last week's report.

 

In pit trades, Fimat bought 800 November, ABN Amro, Rand Financial and UBS Securities each bought 500 November, Man Financial and DT Trading each bought 300 November.

 

On the sell side, Goldenberg Hehmeyer sold 800 November, and Fimat and UBS Securities each sold 600 November.

 

South American soybean futures ended higher, with the July future settling 21-cent higher at US$6.40.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, moving in tandem with soybeans. Soymeal futures followed soybeans higher, making a brief appearance in negative territory in unison with the midday stumble in soybeans. A quiet news front continues to keep the market in the role of a follower, with spreading between the products featured attractions.

 

Soyoil futures ended a two-sided session higher, rebounding from mixed price action on speculative buying. The market stumbled lower on ideas recent advances to contract highs were overdone and lower crude oil futures, but expectations of strong long-term demand for biodiesel limited declines and attracted buyers down the stretch, analysts said.

 

July oil share ended at 44.05%, and the July crush ended at 78 3/4 cents.

 

In soymeal trades, JP Morgan bought 500 September and RJ O'Brien bought 300 December, and FCStonnee sold 300 December.

 

In soyoil trades, Rand Financial bought 400 December, RJ O'Brien bought 300 August and Fimat bought 300 December. Citigroup sold 400 December,