July 25, 2006

 

CBOT Soy Review on Monday: Rebounds; oversold, weather concerns

 

 

Chicago Board of Trade soybean futures quietly climbed higher Monday, bouncing back from recent declines on oversold ideas and mild concerns over warm, dry mid range Midwest weather forecasts.

 

August soybeans ended 6 1/4-cent higher at US$5.83 1/4, November soybeans finished 6 1/4-cent higher at US$6.04 3/4. December soymeal settled US$1.70 higher at US$172.10 a short tonne, while December soyoil ended 12 points higher at 27.16 cent a pound.

 

After recent losses that produced declines in the past week of 26 1/2 cents, and a 41-cent retreat from July highs, futures were overdue for a modest bounce in prices, analysts said.

 

The theme was consistent from the outset, with the underlying threat of hot, dry conditions in the driest areas of the Midwest, providing underlying strength to support prices, traders added.

 

The threat of stressful weather remains a concern in the market, but it was seemingly a muted threat at this point, based on the day's subdued volume and price gains, said a CBOT commission house broker.

 

Meanwhile, near term weather outlook for the Midwest has scattered showers moving through the region, but the bulk of the moisture will stay south of the driest areas of the western Midwest encompassing northwest Iowa, northeast Nebraska and southwest Minnesota, said Mike Palmerino, meteorologist with DTN Meteorlogix Weather Services.

 

Temperatures across the belt will average above normal in a seven day period, with warmest conditions in the upper-90-degree Fahrenheit range pegged for the driest areas of the western belt, Palmerino said. In the eastern belt, temps will average from the mid 80s to mid 90s, with some of the hottest temps expected in west central Illinois, from the Quad City to St. Louis, Mo., Palmerino added.

 

Nevertheless, with soybeans being a crop of August, weather is the greatest interest to that market, as the sensitivity of the crop to dryness in their pod filling stage will support prices, analysts said.

 

Monday afternoon 3 p.m. CDT, U.S. Department of Agriculture is scheduled to release its weekly crop progress report. Analysts say top rated crops in the eastern Midwest should show improvements from the prior week while heat and dryness continued to take a toll on crops in the western Midwest. Floor analysts expect the soybean good-to-excellent ratings to fall within a range from down 2 percentage points to up 2 percentage points.

 

In pit trades, Iowa Grain bought 600 November, Fimat bought 400 November, Rand Financial bought 300 November. Speculative funds were estimated net buyers of 1,600 lots on the day.

 

On the sell side, Fimat sold 400 November, Citigroup and Man Financial each sold 300 November.

 

South American soybean futures ended lower, with the August future settling 4 3/4 cents lower at US$6.25 1/4.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, moving in unison with price strength in soybeans, analysts said. Soymeal bounced higher on technically motivated buying, recovering from oversold market conditions.

 

Soyoil futures ended higher, bouncing back from earlier weakness. Futures experienced mild pressure from early declines in crude oil, but once that market found stability, the underpinning theme of future demand for biodiesel was rekindled, supporting prices for the remainder of the day, traders said.

 

August oil share ended at 43.92%, and the August crush ended at 75 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with Rand Financial a buyer of 800 December, Man Financial a buyer of 300 December and Fimat a seller of 400 December. Speculative funds were net buyers on the day.

 

In soyoil trades, Buying and selling was scattered among various firms, with Tenco buying 400 December, while Rand Financial sold 800 December.