July 17, 2008

 

CBOT Soy Review on Wednesday: Bounce on technicals, long range weather

 

 

Chicago Board of Trade soybean futures climbed Wednesday, bouncing back from prior losses on technical buying and underlying concerns surrounding longer range weather outlooks.

 

August soybeans settled 31 cents higher at US$15.73 and November soybeans ended 32 cents higher at US$15.48.

 

December soymeal settled US$8.40 lower at US$409.70 per short tonne. December soyoil finished 110 points higher at 65.54 cents per pound.

 

The market was able to find its footing after extending Tuesday's downturn, buoyed by technical buying after selling dried up as prices failed to challenge the lows for the month, analysts said.

 

Futures also garnered a boost from longer range forecasts, raising the potential for hotter and drier conditions for the Midwest as soybeans move closer to their critical growing period of August, analysts added.

 

The midday weather models point to an upper level ridge forming around July 29 through the 31, bring hotter and drier conditions to Minnesota, Wisconsin, northern Iowa, and the Dakotas, said Joel Burgio, meteorologist with DTN Meteorlogix.

 

However, this weather pattern provides a mixed feel, as it brings more rain chances for the Delta, an area that is of most concerns for dryness presently, he added.

 

Speculative short covering and end-user buying was featured on the bounce, effectively erasing early losses attributed to another sell-off in crude oil futures.

 

The DTN Meteorlogix weather forecast calls for an early-week round of hot weather over the western Midwest to be a fairly short-lived event. Thunderstorms developing in the north and west will move toward the southeast during the next few days.

 

Eastern Midwest areas have a generally favorable crop weather pattern ahead during the rest of the week. Temperatures will continue to be warm-to-hot, and rainfall will be less than the amounts noted in the western half of the region. In the Mississippi Delta region, very little rainfall is in store through the next seven days. In addition, temperatures will be normal to above normal, with many highs in the mid-90s Fahrenheit.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Trade estimates put soybean export sales at 175,000 to 500,000 metric tonnes. Soymeal sales are projected in a range of 50,000 to 200,000 metric tonnes, with soyoil sales expected in a 5,000-to-60,000-tonne range.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures rallied in step with soybeans, with soyoil managing to divorce itself from the negative influence of lower crude oil futures. Two-sided action was featured, with both markets moving from sharp declines and strong gains over the course of the day.

 

December oil share ended at 44.44% and the November/December crush ended at 74 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission, with speculative fund buying estimated at 2,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots, and commercial buying estimated at 2,000 lots.