August 12, 2009

 

CBOT Soy Review on Tuesday: Bounce on pre-report positioning, fundamentals

 

 

Chicago Board of Trade soy futures rallied Tuesday, recovering from Monday's setback on bullish outlooks toward Wednesday's crop report and supportive underlying fundamentals.

 

CBOT August soys ended 46 cents higher at US$12.16 1/2, September settled 30 cents higher at US$10.97, and November soys finished 28 1/2 cents higher at US$10.38 1/2. In pit trades, speculative fund buying was estimated at 4,000 lots in soys, 1,000 lots in soymeal, and 2,000 lots in soyoil.

 

December soymeal ended US$8 higher at US$313.70. December soyoil finished 157 points higher at 38.77 cents per pound.

 

The trade in general is looking for a bullish crop report and with the uncertainty of the 2009 crop and tight supply and demand fundamentals, buyers were comfortable returning to the market, said Tim Hannagan, analyst with Alaron Trading.

 

Positioning ahead of the crop report was the dominant feature, but fresh export sales and news of China looking to increase its soy imports moving forward provided a boost to keep sellers sidelined.

 

The U.S. Department of Agriculture announced private export sales of 110,000 metric tonnes of soys for delivery to China in the 2009-10 marketing year.

 

Otherwise, traders were content to await Wednesday's crop report before taking on added risk.

 

However, tight old crop inventories, the need for an extended growing season due to late crop development in the eastern Midwest and worries about limited supplies in September remain underpinning themes in the market, analysts said.

 

The USDA is scheduled to release its first 2009 crop production estimates based on field surveys and its monthly supply and demand estimates Wednesday at 8:30 a.m. EDT (1230 GMT). The average of analysts' estimates projects a crop size of 3.213 billion bushels with a yield of 42.1 bushels per acre. The averages ranged from 3 billion to 3.275 billion bushels for production and 40.9 to 43.5 for yield.

 

The average of trade estimates by analysts surveyed by Dow Jones pegged 2008-09 U.S. soy ending stocks to come in at 106 million bushels. This is down 4 million from the previous month's estimate of 110 million. Ending stocks for 2009-10 were pegged at 221 million bushels from a range of estimates that span from 145 million to 305 million bushels.

 

 

Soy Products

 

Soy product futures ended sharply higher, propelling upward in step with advances in soys. Soymeal futures leaped on spillover from soys, with underlying support from the tight availability of nearby supplies. Soyoil futures soared, rallying on soys strength, with borrowed momentum from higher world vegoil prices and talk of increased vegoil demand underpinning features, analysts say. Soyoil grabbed product share from soymeal on adjustments in the meal/oil spread relationship.

 

December oil share was 38.39%, while the November/December soy crush ended at 78 1/2 cents.