August 6, 2009

 

CBOT Soy Review on Wednesday: Ends higher as market adds risk premium

 

 

Chicago Board of Trade soy futures finished higher Wednesday as the market built in risk premium after trading both sides during an emotional session.

 

September soys rose 4 1/2 cents to US$10.88 a bushel, and November soys ended up 13 1/2 cents at US$10.45. December soyoil closed up 6 points at 38.23 cents per pound, while December soymeal ended up US$6.80 at US$318.60 per short tonne.

 

"Traders are pretty torn in the soy market," said Arlan Suderman, analyst for Farm Futures. "On the one hand, the crop conditions shout high yields. On the other hand, it's very delayed. It could easily go either way, so emotions sway back and forth."

 

The market is building in risk premium due to the crop's slow development and the potential for bad weather, Suderman said. Traders are concerned about hot weather expected in the Midwest starting this weekend.

 

"The weather still continues to be the (source of) nervousness," said Jason Roose, analyst for U.S. Commodities. "We're watching the weather a lot closer."

 

Global demand also remains solid, traders said. Weekly U.S. soy export sales, due from the U.S. Department of Agriculture at 8:30 a.m. EDT Thursday, are expected to be 2.2 million to 2.5 million metric tonnes. The USDA last week announced private export sales of 1.92 million tonnes of soys for delivery to China, which will be included in this week's sales report.

 

"The soy sales totals could approach an all-time record," AgResource Company said in a comment.

 

Commodity funds bought an estimated 3,000 contracts.

 

Soys recovered after falling earlier in the session on estimates for a big U.S. crop, traders said. Private analytical firm Informa Economics said its "mostly likely" final estimate for soy production was 3.322 billion bushels, with an average yield of 43.5 bushels per acre, traders said.

 

Informa estimated the USDA next week will peg production at 3.177 billion bushels, with an average yield of 41.6 bushels per acre, traders said. The government's crop estimates are due at 8:30 a.m. EDT on Aug. 12.

 

 

Soy Products

 

CBOT soy product futures ended higher on the strength in soys, traders said. Commodity funds bought an estimated 1,000 soymeal contracts and were seen as even in soyoil.

 

The markets settled near session highs. Dec soymeal hit an open outcry session high of US$319, and Dec soyoil hit a session high of US$38.30.