August 4, 2007

 

CBOT Soy Review on Friday: Climbs on speculative buys; crop uncertainties

 

 

Chicago Board of Trade soybean futures ended higher across the board Friday, underpinned by speculative-led buying, with yield uncertainties, supportive crop estimates, and technical buying underpinning prices.

 

August soybeans settled 9 cents higher at US$8.39, and November soybeans finished 6 1/2 cents higher at US$8.61. August soymeal settled US$4.30 higher at US$222.20 per short tonne. August soyoil ended 8 points lower at 37.35 cents a pound.

 

Traders said the uncertainty of 2007 yields remains an underpinning feature of the market, with longer range forecasts of warm, dry conditions keeping the market on edge, analysts said.

 

Supportive short-term technicals uncovered fresh buying as the most active November future challenged key resistance at its 50-day moving average, said Mike Zuzolo, senior analyst with Risk Management Commodities Inc. in Lafayette, Ind.

 

Bullish technical traders were encouraged by the market's ability to hold underlying support at the November future's 10-day moving average, with crop uncertainties remaining a driver of prices as soybean crops move through their critical yield development stage, Zuzolo added.

 

Nevertheless, near-term weather forecasts calling for beneficial Midwest rains during the weekend into early next week applied mild pressure to limit advances and keep prices hovering in a sideways trading pattern, analysts added.

 

Private analytical firm Informa Economics estimated 2007-08 U.S. 2007-08 soybean production at 2.700 billion bushels with a yield of 42.7 bushels per acre. The figure was down from their July forecast of 2.719 billion bushels and yield of 43.0 bushels per acre.

 

In the July supply and demand report, the U.S. Department of Agriculture estimated U.S. soybean production at 2.625 billion bushels and a trend line yield of 41.5 bushels per acre.

 

The DTN Meteorlogix short-term forecast - through the middle of next week - calls for rainfall of two inches total in the western Midwest during two separate thunderstorm events - Saturday, and Monday through Wednesday. This moisture will help improve soybean yield prospects. Eastern Midwest areas will likewise have rainfall, but with lesser amounts - generally from one to one and one-half inches, with lighter coverage noted in the Ohio Valley. As with the western Midwest, the eastern Midwest rains will help enhance the soybean yield outlook, Meteorlogix reports.

 

Meanwhile, the outlook through Monday, Aug. 13 in the central U.S. returns to generally warm and dry, with temperatures above normal, and rainfall near to below normal, Meteorlogix forecasts.

 

In pit trades, Fimat bought 500 November contracts, ADM Investor Services bought 400 November, and JP Morgan, Fortis and Rand Financial each bought 300 November. Sellers were lightly scattered among various commission houses. Speculative fund buying was estimated at 3,500 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed Friday. Soymeal futures rallied higher, feeding off bullish support from soybeans. The market garnered product share from soyoil, underpinned by oil/meal spread unwinding, analysts said.

 

Soyoil futures ended on the defensive, stumbling lower on adjustments in the oil/meal spread and spillover weakness from backpedaling crude oil futures and overnight weakness in Malaysian palm oil futures, analysts said. Meanwhile, recent commercial buying interest continues to limit downside pressure, analysts added.

 

August oil share ended at 45.67% and the August crush ended at 60 3/4 cents.

 

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

 

In soyoil trades, buyers and sellers were scattered among various commission houses, speculative funds estimated buyers of 1,000 lots.