August 14, 2007

 

CBOT Soy Review on Monday: Settle up, as market adds risk premium

 

 

Chicago Board of Trade soybean futures ended higher Monday, bouncing to the upside on weather-related concerns for crops in the southern U.S. Midwest and Delta.

 

August soybeans settled 11 cents higher at US$8.61, and November soybeans finished 10 cents higher at US$8.81 3/4. August soymeal settled US$3.10 higher at US$235.60 per short tonne, and December soymeal settled US$2.90 higher at US$244.10. August soyoil ended 22 points higher at 36.50 cents a pound, and December soyoil finished 9 points higher at 37.35.

 

The market took time to add some premium to prices, as heat and dryness in the southern soybean belt at the crops critical yield development stage raised concerns in the market place, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The market maintained double-digit gains on speculative-led buying for most of the day. Activity remained light, with technical buying a feature as prices bounced to 3-week highs, analysts said.

 

A quiet news front kept attention on weather-related price adjustments following a hot and dusty weekend in the southern belt, traders said. Otherwise futures had few incentives to push the market, with talk of a break from the recent heat wave and the potential for rain later in the week in dry areas providing some market caution to limit upside potential, analysts added.

 

Meanwhile, the DTN Meteorlogix weather forecast calls for the Midwest from central Missouri south to continue under the influence of mostly dry and hot conditions, which increase stress on filling crops. The Delta will have hot and dry weather for at least the next seven days.

 

In contrast, rainfall of more than one inch occurred in the western and northern Midwest during the weekend - from eastern Nebraska through southern Minnesota and in the immediate Great Lakes area. This sector of the Midwest has a much more favorable crop situation, Meteorlogix reports.

 

U.S. Department of Agriculture is scheduled to release its weekly crop progress report Monday 4 p.m. EDT. Analysts anticipate crop rating declines in the range of 1 to 3 percentage points.

 

In pit trades, Fimat bought 1,100 November, RJ O'Brien bought 400 November, and Tenco bought 300 November. UBS Securities sold 400 November, and JP Morgan sold 300 November. Speculative fund buying was estimated at 3,500 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, rising in unison with price strength in soybeans. Soyoil futures were the upside leader of the products for most of the day, underpinned by spillover strength from Malaysian palm oil and crude oil futures. However, the inability of the market to hold above major moving average resistance and a late pull back in crude oil attracted some selling pressure to trim advances down the stretch, analysts said.

 

Soymeal futures ended higher across the board, bouncing in unison with soybeans. Active contracts rallied to 4-week highs, with solid demand an underpinning feature, analysts said.

 

December oil share ended at 43.34% and the August crush ended at 58 3/4 cents.

 

In soymeal trades, buyers and sellers were lightly scattered among various commission houses. Speculative funds estimated net buyers on the day.

 

In soyoil trades, Tenco and Citigroup each bought 300 December. Fimat sold 300 December. Speculative funds were estimated buyers of 1,000 lots.