July 26, 2008

 

CBOT Soy Review on Friday: Rallies late on short-covering bounce

 

 

Chicago Board of Trade soybean futures ended higher Friday, capping off the week with a short-covering bounce amid deeply oversold market conditions, analysts said.

 

August soybeans settled 13 3/4 cents higher at US$13.98 3/4 and November soybeans ended 13 1/2 cents higher at US$13.86 1/2.

 

December soymeal settled US$0.40 higher at US$361.20 per short tonne. December soyoil finished 25 points higher at 60.45 cents per pound.

 

A quiet news front kept futures on the defensive for most of the day, but after a two-week tumble, futures were overdue for a bounce, particularly with the uncertainties lying ahead for new crop production, a CBOT floor analyst said.

 

Technically inspired buying served as a catalyst for the gains also. The inability of the market to attract aggressive selling once active contracts challenged the week's lows and major moving-average support opened the door for short covering to emerge, traders said.

 

End-of-the-week consolidation was featured, with traders adding a little premium amid the risk of a change in weather patterns during the weekend, particularly with variable crop conditions seen across the Midwest due to late plantings and replantings, analysts added.

 

"Facing tight projected ending inventories and new crop uncertainties, the trade is not ready to write off this market yet," a cash-connected CBOT broker said.

 

The DTN Meteorlogix forecast calls for rainfall of up to 2.5 inches in Iowa and Missouri during the weekend. Damage from renewed flooding is possible in the areas of heaviest rain. Elsewhere, moisture will be mostly favorable for crop progress. West-central Minnesota, centered on Redwood Falls, is becoming a dry sector of the U.S. Corn Belt. This portion of Minnesota has had only about a third of its normal rainfall during July. With crop needs at their most critical during reproduction of corn and soybeans, this bears close watching. Only scattered rain coverage is in store for the weekend in this area, Meteorlogix reports.

 

Very little rainfall is forecast for the southern U.S. crop areas of the Mississippi Delta and Southern Plains. Temperatures will be hot as well, with daytime highs reaching over 100 degrees Fahrenheit. These episodes of hot temperatures and below-normal rainfall will continue to stress crops throughout these regions, Meteorlogix adds.

 

In pit trades, buyers and sellers were scattered among various commission houses.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, rebounding from earlier declines on support from a late bounce in soybeans. Oversold market conditions and the exhaustion of sellers near the week's lows attracted technical buying to lift futures from negative territory, analysts said. Overall activity was light, with a quiet news front keeping traders in a cautious mood, with lower crude-oil prices and a rise in soybeans providing mixed signals to traders, analysts added.

 

December oil share ended at 45.63% and the November/December crush ended at 75 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, buyers and sellers were scattered among various commission houses.