July 31, 2008

 

CBOT Soy Review on Wednesday: Climb on crude, technical buys, uncertainties

 

 

Chicago Board of Trade soybean futures finished Wednesday's day session higher, rebounding from early losses on spillover support from crude oil, technical buying and underlying crop uncertainties.

 

August soybeans settled 9 3/4 cents higher at US$13.94 and November soybeans ended 14 cents higher at US$14.05.

 

December soymeal settled US$6.70 higher at US$376.20 per short tonne. December soyoil finished 40 points higher at 59.48 cents per pound.

 

A spike in crude oil futures uncovered speculative buying, with the inability of active contracts to challenge recent lows providing supportive technical signals to attract buying as well, traders said.

 

Crude oil climbed more than US$4 a barrel in late dealings.

 

Lingering uncertainties surrounding weather, crop yield potential, acreage and demand served as underlying features to keep a floor under prices, analysts said. The absence of fresh fundamental news promoted a consolidative theme, with outside market influences providing a late spark to kick start upside movement.

 

Nevertheless, prices remain confined within a trading range, supported by technical strength above the pre-June flood rally highs, while generally favorable near term crop conditions fail to provide an incentive to aggressively push prices higher, a CBOT floor analyst said.

 

Otherwise, spreading was featured, with the nearby August contract losing ground to deferred contracts, as traders liquidate and roll out of August positions ahead of the delivery period. 2009 contracts garnered strength from the U.S. Department of Agriculture's decision not to release CRP acres in the fall.

 

The DTN Meteorlogix weather forecast said upper-air forecast maps through next week indicate no stressful heat building over the Midwest. The jet stream track will be mostly zonal - west to east - across the region. This trend keeps temperatures in a normal to above-normal category, and brings additional rainfall chances into the Midwest outlook through the first 10 days of August.

 

Meanwhile, the main weather problem area is the Mississippi Delta, with only light rains, less than an inch total precipitation, seen during the next week. In addition, temperatures will range between 95 and 100 Fahrenheit, further stressing crops and threatening yield prospects, Meteorlogix reports.

 

Looking ahead, deliveries against the Chicago Board of Trade August soybean and soymeal contracts on first notice day Thursday are expected to remain light, while soyoil notices are seen large. Analysts expect deliveries against the CBOT August soybean contract to fall in a range of zero to 500 lots, with most analysts leaning toward a range of zero to 200 lots. Soymeal deliveries are seen between zero and 200 lots, while soyoil delivery notices are expected in a range of 2,000 to 4,000 contracts.

 

The U.S. Department of Agriculture at 8:30 a.m. EDT Thursday will issue its weekly export sales report. Soybean sales are estimated at 250,000 to 450,000 tonnes. Soymeal sales are projected in a range of 50,000 to 100,000 metric tonnes, with soyoil sales expected in a 5,000- to 20,000-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 bounced in unison with soybeans, with soyoil also energized by spillover strength from crude oil. Meal/oil spread remained a featured, with oil losing product share once again.

 

December oil share ended at 44.15% and the November/December crush ended at 77 cents.

 

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

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 1,000 lots.