July 18, 2009

 

CBOT Soy Review on Friday: Rallies on short-covering after tumble

 

 

Short-covering pulled Chicago Board of Trade soy futures sharply higher Friday as the market rebounded from a fall Thursday.

 

November soys closed up 33 1/2 cents at US$9.23 1/2 a bushel, up 6 1/2 cents on the week. December soymeal finished up US$10.20 at US$278.70 per short tonne, and December soyoil closed up 104 points at 35.52 cents per pound.

 

The market was due for a recovery after November soys, which represent the new crop, touched a 3.5-month low Thursday, an analyst said. Prices were under pressure from bearish crop weather and news of China releasing supplies out of their strategic reserves.

 

"We slapped (the market) hard this week," said Jerry Gidel, analyst for North America Risk Management Services.

 

Commodity funds bought an estimated 4,000 soy contracts Friday.

 

Front-month August soys could continue to show strength due to ongoing worries about tight old-crop supplies, Gidel said. The nearby contract climbed 33 1/2 cents to US$10.09 1/2 after closing below US$10 on Thursday for the first time since late April.

 

"I'm kind of optimistic there is still life left in the old dog," he said.

 

August is the most important month for U.S. soy development. Weather in the corn belt in July has been cooler than normal, and "major issues should not suddenly develop," according to a forecast from T-Storm Weather.

 

There are some concerns about the delayed development of the crop after late planting. The U.S. Department of Agriculture is slated to issue a crop progress report at 4 p.m. EDT Monday. As of Sunday, 24% of the crop was blooming, below the average of 43%.

 

"The problem is we're still late," Gidel said. "No one ever seems to worry about the lateness. (Plants) are green, and they are improved from three weeks ago, but they haven't been able to catch all the way up."

 

 

Soy Products

 

Soy products ended higher with soys on short-covering, traders said. Commodity funds bought an estimated 1,000 soymeal contracts and 2,000 soyoil contracts.

 

December soymeal ended down US$10.60 on the week. December soyoil closed up 205 points on the week.

 

Gains in crude oil were supportive for the soy complex Friday, traders said. Crude oil is linked to soy because soyoil is used for biodiesel.