July 14, 2007

 

CBOT Soy Review on Friday: Higher; new highs for fifth straight day

 

 

Chicago Board of Trade soybean futures ended higher Friday, setting new contract highs for the fifth consecutive day, as the market continues to add risk premium to prices.

 

July soybeans settled 3 cents higher at US$9.13, and November soybeans finished 7 1/4 cents higher at US$9.48 3/4. August soymeal settled US$1.90 higher at US$255.60 per short tonne. August soyoil ended 5 points higher at 37.97 cents a pound.

 

The market continues to feed off hotter, drier Midwest weather outlooks, with bullish technical momentum aiding the supportive tonnee as well, analysts said.

 

Speculative buying was featured again, as tightening projected 2007-08 soybean inventories is placing increased focus on weather, traders said. The risks associated with dry conditions on soybean yields headed toward the key pod- filling stage of development in a year when every bushel is counted on to sustain comfortable stock levels encouraged traders to add premium, analysts added.

 

Futures initially consolidated lower, back-pedaling on profit-taking after setting new contract highs throughout the week. However, midday weather forecasts reaffirming drier outlooks for next week and the latter part of July gave buyers confidence to rekindle upward momentum, traders said.

 

The market rallied to new highs for the fifth consecutive day, with the most active November contract climbing just below the psychological resistance level of US$9.50 per bushel. Traders will again look to Monday morning forecasts to confirm expected dry conditions, with crop ratings expected to decline in Monday's crop progress report, a CBOT floor analyst said.

 

The DTN Meteorlogix weather forecast calls for mild temperatures but mostly dry conditions in the Midwest through the coming weekend, and dry weather with warmer to hotter temperatures during next week. Stressful weather is forecast to build for flowering soybeans, with high temperatures moving into the 90s Fahrenheit over the western and central Midwest, and getting close to that range in the eastern Midwest. Very warm and dry conditions and reduced topsoil moisture are worrisome in the Great Lakes, and the western and northern Midwest.

 

The time frame from July 19 through July 23 holds a continued risk of upper-atmosphere high-pressure formation over the north-central U.S. This is a dry weather pattern from the northern Plains to the western Midwest with hot weather developing. There is also the possibility for this heat to spill eastward into the Mississippi/Ohio Valley area and south into the Delta. Dry soils over much of the northern and eastern Midwest make rapid daytime heating and crop stress a definite possibility, Meteorlogix reports.

 

On tap for Monday, the National Oilseed Processors Association's report on the June soybean crush is scheduled to be released at 8:30 a.m. EDT. Soybean crush rates for June in NOPA's monthly soybean crush report are expected to decline to about 136.4 million bushels from the previous report.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative funds estimated net buyers of 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures settled higher, rallying to new contract highs in unison with soybeans.

 

Soymeal futures continued their upward leg, climbing on spillover support from soybeans and lingering worries over smaller available soybean supplies in the next marketing year.

 

Soymeal is very responsive to soybean crop worries, as soybeans account for the more world soymeal supplies, where soyoil has competition of other world vegoils, said Anne Frick, senior oilseed analyst with Prudential Financial in New York.

 

Soyoil futures carved out new highs in active months as well, benefiting from spillover from soybeans, and underlying strength in world vegoils markets, analysts said.

 

July oil share ended at 42.68% and the July crush ended at 59 1/4 cents.

 

In soymeal trades, ADM Investor Services bought 400 December and Fimat bought 500 December. Speculative fund buying was estimated at 3,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative funds estimated net buyers on the day.