July 24, 2009
CBOT Soy Review on Thursday: Higher on fresh bullish fundamental data
Soy futures at the Chicago Board of Trade closed higher and nearer the session high Thursday, amid some price-friendly fundamental market developments that prompted short covering and perceived bargain-hunting buying, an analyst said.
August soys closed up 5 cents at US$10.23 1/2 a bushel. New-crop November soys were up 24 cents at US$9.32.
Corn led the grain futures complex higher, said Victor Lespinasse, market analyst with www.grainanalyst.com. News that the U.S. Department of Agriculture will adjust corn acreage figures in the Aug. 12 crop production report gave corn prices a big boost, as it is widely expected the USDA will adjust down the total U.S. corn planted acres in that report.
Thursday morning's National Oilseed Processors Association's soy crush report was deemed bullish, as it showed the June U.S. crush at 140.169 million bushels. This compares to 146.244 million bushels in May. Soyoil stocks were pegged at 3.403 billion pounds compared with 3.235 billion pounds in May. Meal stocks in June were pegged at 417,935 short tonnes versus 577,599 short tonnes in May.
According to average pre-report trade guesses, Census Bureau data was expected to show June soy crush totaled 138.36 million bushels. Meal stocks are guessed at 439,600 short tonnes, and soyoil stocks were estimated at 3.36 billion pounds.
"The crush data is a little better than expected," Lespinasse said. Another Midwest-based market analyst said: "Either USDA is too low or the crush pace must slow, which it historically does, over the last two months of the marketing year. Tight old-crop soy supplies will force the crush pace to slow in July and August," he said. "Meal stocks were under expectations and soyoil stocks were above expectations, which could lead to some spreading in the product markets," the Midwest analyst said.
The weekly USDA export sales report was also mostly market-friendly, showing U.S. soy export sales for 2008-09 at 320,000 metric tonnes, with 2009-10 sales pegged at 382,000 metric tonnes. This was at the upper end of trade expectations.
The USDA also announced Thursday morning a sale of 116,000 metric tonnes of U.S. soys to China in the 2009-10 marketing year.
China's auction of 500,000 metric tonnes of state-owned soy reserves on Thursday failed to attract any bids, reports said. As a result, talk is now circulating the Chinese government may offer subsidies to crushers as early as Friday in an effort to bolster soy prices and aid local crushers. Soy futures on the Dalian Commodity Exchange in China closed higher Thursday on the news.
Still, further upside price potential in the soy complex futures will be tempered by weather in the U.S. Corn Belt "that couldn't be better" for growing a soy crop, Lespinasse said. Scattered, timely rain showers recently, along with normal-to-slightly-below-normal temperatures, and more of the same in the forecast, are a strong trump card held by the bears.
Technically, the next upside price objective for the bean bulls is to push and close November prices above solid technical resistance at US$9.75 a bushel. The next downside price objective for the bears is pushing and closing prices below solid technical support at the July low of US$8.81 1/4 a bushel.
Soy Products
Soy product futures closed higher Thursday. However, soy oil was a laggard as weekly USDA export sales of bean oil were deemed disappointing. Meal weekly USDA export data was stronger, which did prompt some spread trading, whereby traders sold bean oil and bought soy meal, the Midwest analyst said.
December soy oil closed up 18 points at 35.40 cents a pound. December soy meal futures closed up US$10.30 at US$283.60 a tonne.
