August 20, 2009

 

CBOT Soy Review on Wednesday: Rebounds from early slide as oil rallies

 

 

Soy futures on the Chicago Board of Trade ended mostly lower Wednesday, though prices recovered most of an early slump as crude oil rallied for a second consecutive day.

 

November soy futures fell 1 cent to US$9.58, after sinking in overnight trading to US$9.40 1/2, the lowest intraday price since US$9.13 3/4 on July 30. September soys rose 1 1/2 cent to US$9.97.

 

Crude futures surged nearly 5%, spurring short-covering across the soy complex and muting the impact of bearish Midwest weather, analysts said. Stronger crude signals economic recovery and increased demand for other commodities, and may also portend a flow of speculative buying interest into agricultural futures.

 

Additionally, with Midwest corn and soy crop development behind schedule, the threat of an early frost continues to linger, said John Kleist, broker/analyst with Allendale Inc.

 

"We're still a couple of weeks late" in soy development, Kleist said. "It's too early to put (November soys) to US$9.00 or below. The market is not seeing any aggressive selling under US$9.50, and especially under US$9.40. The crop isn't out of the woods yet."

 

An earlier than normal frost would bring the growing season to a premature end for much of the Midwest, hurting yields. The first frost typically arrives between mid-September and early October.

 

Widespread rains across the Midwest this week are providing a boost to dry areas, reinforcing expectations for a record soy harvest. More rain is forecast over the next day.

 

"The combination of expanding late season rains this week for nearly all of the dry spots in the Midwest and a forecast for a rather mild first half of September is quite favorable," Commodity Weather Group LLC's Joel Widenor said in an email.

 

"I see no reason that the crop should be held back from current projections given the very timely rains in most areas," Widenor said.

 

Scouts on the Pro Farmer Midwest Crop Tour encountered decent crops in Iowa earlier Wednesday. Soy fields surveyed had "impressive pod sets," said Chip Flory, director of the western leg of the tour, though "we have run into some disease issues."

 

CBOT soy oil futures finished higher amid buying from speculative funds and commercial firms, while soy meal futures were mostly lower.

 

December soy meal futures fell 90 cents to US$283.30 per tonne, while December soy oil futures rose 0.15 cent to 36.70 cents per pound.

 

Commodity funds sold an estimated 2,000 soy contracts and bought 1,000 soyoil contracts, CBOT floor sources reported.