August 22, 2009

 

CBOT Soy Review on Friday: Surges to week's high on frost concerns, oil

 

 

Soy futures on the Chicago Board of Trade surged to a high for the week Friday on robust exports, a rally in crude oil and concern that an early Midwest frost may slash the harvest.

 

November soy futures rose 16 cents to US$9.73, after earlier reaching US$9.88, the highest since US$10.31 on Aug. 14. November still ended down 0.9% from last week's close of US$9.81 1/2. September soys rose 23 3/4 cents to US$10.23.

 

Temperatures will drop as low as 53 degrees to 55 degrees Fahrenheit in Des Moines, Ia., Minneapolis, Minn., and other areas of the Midwest Friday and Saturday nights, according to the National Weather Service.

 

Corn and soy development is a few weeks behind normal across the Midwest after a wet spring delayed farmers' planting. Crops in many areas need an extended growing season to fully develop, said Dale Durchholz, senior market analyst with AgriVisor, LLC in Bloomingtonne, Ill.

 

"People are expressing some concern about the maturity of the crops," Durchholz said. "There is some risk" to production. "People don't want to be bullish" on soy prices, he said. But "they're really a little scared of staying too short."

 

Concern over an early Midwest frost is overblown, said Mike Tannura, President of T-Storm Weather.

 

"If an unusually early frost-freeze were to occur, it would occur in mid-September, which is still four weeks away," Tannura said. "Forecasting a damaging frost-freeze for mid-September on Aug. 21 is the equivalent of forecasting a severe heat wave for mid-July on June 21."

 

Oil futures climbed above US$74 a barrel intraday to a high for the year. Crude's recent rally is viewed as a harbinger of an economic recovery that would boost demand for all commodities, analysts said.

 

Brisk foreign demand, particularly from China, continued to underpin the soy complex. A drought that cut South America's soy crop has buyers turning increasingly to the U.S. There is "talk surfacing that Brazil has run out of beans," Benson Quinn Commodities Inc. said.

 

Professional Farmers of America, which wrapped up its annual Midwest crop tour Friday, estimated the 2009 U.S. soy crop at 3.15 billion bushels, assuming a "normal" finish to the growing season.

 

By comparison, the U.S. Department of Agriculture estimates a harvest of 3.199 billion bushels.

 

CBOT soy meal futures rose to the highest level in more than a week and soy oil also gained.

 

December soy meal futures rose US$6.60 to US$290.00 per tonne, the highest closing price since US$306.50 on Aug. 13. December soy oil futures rose 0.55 cent to 36.94 cents per pound.

 

Commodity funds bought an estimated 5,000 soy contracts, 1,000 soymeal contracts and 2,000 soyoil contracts, CBOT floor sources reported.