July 12, 2007

 

CBOT Soy Review on Wednesday: Futures end up; new contract highs again

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, setting new highs again, as weather concerns, technical strength and longer-term fundamental support continued to buoy upside movement.

 

July soybeans settled 2 cents higher at US$8.91, and November soybeans finished 2 1/4 cents higher at US$9.22 3/4. August soymeal settled US$1.50 higher at US$246.40 per short tonne. August soyoil ended 11 points lower at 37.73 cents a pound.

 

The potential for heat and dryness in the Midwest next week served as a spark to extend recent gains, with bullish technical momentum and outlooks for a supportive supply and demand report Thursday underpinning prices, analysts said.

 

The market rallied to new contract highs. But its inability to attract follow-through buying at the highs, coupled with commercial selling, attracted profit-taking pressure to cap upside movement, traders said.

 

Nevertheless, long-range fundamental outlooks remained an underpinning feature to keep a floor beneath prices, with new crop months supported by ideas that deferred months have to produce price gains in order to entice South American producers to increase soybean plantings in the next marketing year, a CBOT floor analyst added.

 

However, light position-evening ahead of Thursday's crop report - and private forecasts calling for more Midwest rain next week - kept a lid on upside movement, traders said

 

The DTN Meteorlogix Weather Forecast calls for temperatures to remain normal to below normal through the end of the week across the central U.S. Conditions will be generally favorable for flowering soybeans. However, dryness is becoming more of a concern in areas with reduced soil moisture supplies. The dry-weather worries now cover much of the Midwest north of Interstate 80, except for eastern Iowa through northern and central Illinois into central Wisconsin. Northern Indiana, Ohio, Michigan, northern Iowa, southern Minnesota, eastern South Dakota and eastern Nebraska are notable areas of concern.

 

Meteorlogix maintains a forecast for a ridge west/trough east upper air pattern, which has been in place for the past few weeks. This forecast features generally warm and dry weather in the central U.S. through next week.

 

U.S. Department of Agriculture is scheduled to release its monthly supply and demand report at 8:30 a.m. EDT Thursday. The average of analysts' estimates peg 2006-07 U.S. soybean ending stocks at 594 million bushels, down 16 million from June's forecast. The estimates ranged between 575 million and 610 million bushels. The average of analyst estimates pegged 2007-08 marketing year-ending stocks at 221 million bushels, down from the June forecast of 320 million bushels. The estimates ranged from 176 million to 270 million bushels.

 

USDA is also scheduled to release its weekly export sales report at 8:30 a.m. EDT Thursday. Analysts predict soybean sales of 100,000 to 250,000 metric tonnes.

 

In pit trades, ADM Investor Services bought 400 March and 400 May, and Penson GHCO bought 500 November. Term Commodities sold 1,500 November. Speculative fund buying was estimated at 1,500 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal marching to new highs in unison with soybeans. Soymeal ended up, carving out new contract highs, buoyed by spillover from soybeans amid concerns over the potential for smaller new crop inventories, analysts said.

 

Soyoil futures ended lower, after a two-sided session. The market fell under pressure from soymeal/soyoil spreading, profit-taking pressure and a lack of fresh supportive news, traders said.

 

July oil share ended at 43.25% and the July crush ended at 64 1/4 cents.

 

In soymeal trades, Fimat bought 500 December. Fimat sold 900 September, Fortis sold 800 December and JP Morgan sold 300 December.

 

In soyoil trades, JP Morgan bought 300 August, Fimat bought 300 August and 300 December. JP Morgan sold 300 December, Citigroup sold 400 September, and Rand Financial sold 400 December. Speculative fund selling was estimated at 1,500 lots.