August 22, 2007

 

CBOT Soy Review on Tuesday: Rises on technical buys, perceived crop threat

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, climbing on technical buying and perceived crop threats, analysts said.

 

September soybeans settled 4 cents higher at US$8.15 3/4, and November soybeans finished 3 3/4 cents lower at US$8.31. September soymeal settled US$2.00 higher at US$222.40 per short tonne, and December soymeal settled US$2.20 higher at US$229.10. September soyoil ended 7 points lower at 34.92 cents a pound, and December soyoil finished 21 points lower at 35.58.

 

The market staged a minor correction from a defensive trend, with potential crop problems associated with flooding in the upper Midwest and heat-related issues in the southern soybean belt sparking upside movement, analysts added.

 

Lower-than-expected weekly crop ratings, coupled with the varying weather conditions across the Midwest, sparked the debate over crop problems, with traders taking the opportunity to add some premium back into the market, a CBOT floor analyst said.

 

Otherwise, technical strength helped underpin prices, with futures satisfying a near-term objective of pushing the November contract into a chart gap left from last week, traders added.

 

However, futures did trim advances heading down the stretch, as traders continue to take a cautious approach when spec buying subsides, with concrete evidence of crop problems still unavailable, an analyst added.

 

The DTN Meteorlogix weather forecast calls for additional heavy storms to bring more flooding to the western and northern Midwest as the rest of the week unfolds. The southern Midwest and Delta crop areas remain in the grip of a hot and dry weather pattern that has dominated the month of August. There is little immediate relief seen from this situation.

 

Hot and dry weather continues over the southeastern Midwest until a cold front arrives later this week. In the Delta, the hot and dry weather continues to stress late filling soybeans for at least a few more days. Temperatures will again reach daytime highs of 95-100 Fahrenheit, Meteorlogix forecasts.

 

In other news, crop scouts on the eastern leg of the Pro Farmer Midwest Crop Tour found an average pod count of 890 in six fields sampled. The beans look fairly good overall, "but not the best, but recent heavy rains, with much standing water observed in the fields, are expected to improve pod fill," they said.

 

On the western leg of the tour, scouts reported soybean conditions in the southeastern part of Nebraska look favorable for crop development. The average soybean pod count of the four fields sampled was 1,300 pods in a three- foot by three-foot square.

 

"The soybeans observed were impressive," said Chip Flory, editor of the Pro Farmer newsletter.

 

In pit trades, buyers were scattered among various commission houses, with Fimat buying 800 November. Speculative funds were estimated buyers of 3,000 lots. FCStonnee, JP Morgan, and Fimat each sold 500 November, and RJ O'Brien and Rand Financial each sold 400 November.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal continuing to grab product share from soyoil. Soymeal futures rallied in unison with soybeans, garnering additional support from technical buying, analysts said.

 

In contrast, soyoil futures backpedaled lower, falling under the weight of meal/oil spreading and the defensive influence of a sharp slide in crude oil futures below the US$70.00-per-barrel level, analysts said.

 

December oil share ended at 43.71% and the September crush ended at 57 3/4 cents.

 

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

 

In soyoil trades, JP Morgan bought 700 December, and Fimat sold 400 December. Speculative fund selling was estimated at 1,000 lots.