August 23, 2007

 

CBOT Soy Review on Wednesday: Higher on crop concerns, technical buying

 

 

Chicago Board of Trade soybean futures rallied Wednesday, continuing their recovery from recent lows on technical buying and crop concerns.

 

September soybeans settled 15 1/2 cents higher at US$8.31 1/4, and November soybeans finished 16 cents higher at US$8.47. September soymeal settled US$6.80 higher at US$229.20 per short tonne, and December soymeal settled US$7.50 higher at US$236.60. September soyoil ended 28 points higher at 35.20 cents a pound, and December soyoil finished 24 points higher at 35.82.

 

The market bounced higher, effectively adding risk premium back into prices, as worries over flooding problems in the upper Midwest, and heat and dryness stress in the southern soybean belt raised the stakes for soybean yield and production, analysts said.

 

The uncertainty of what yields could eventually be is keeping support in the market, a trader said. Spillover strength from surging wheat futures aided the firm tonnee as well, floor traders said.

 

Meanwhile, technical buying was a featured attraction, with traders satisfying near-term upside objectives, analysts said. The advances were accelerated once the active November futures moved firmly into a chart gap and bolted above resistance at its 100-day moving average, an analyst added.

 

Nevertheless, the inability of futures to pierce resistance at the psychological US$8.50 level and 10-day moving average attracted light end-of-day profit-taking to trim advances, traders said.

 

The DTN Meteorlogix weather forecast calls for up to two inches of rain by Friday in the western Midwest, and one and one-half inches of rainfall in northern Illinois and the Great Lakes area. This sector of the Midwest is beginning to show signs of crop stress because of very wet conditions.

 

Dry and hot conditions again dominate the southern Midwest and Delta. More dryness will remain through Friday, with stressful temperatures in the mid 90s to 103 Fahrenheit, hottest expected in the Delta. The Ohio Valley has some cooler weather and a chance for showers during the weekend. However, the Delta will have only isolated thundershowers. The overall weather pattern of hot and potential crop-withering dryness remains in effect over this sector of the main U.S. crop areas, Meteorlogix reports.

 

In other news, crop scouts on the eastern leg of the Pro Farmer Midwest Crop Tour Wednesday morning found dry fields with large cracks but the soybean crops are in pretty good condition. The tour headed out of Bloomingtonne, Ill., to sample fields on 10 separate routes.

 

On the western leg of the tour, scouts said soybeans are healthy, with favorable moisture conditions seen in every field on one route, which should help late season soybean pod-filling.

 

On tap for Thursday, the Census Bureau's July crush report is scheduled for release at 8 a.m. EDT. U.S. soybean crush for July is expected to be 149.3 million bushels, up from the June crush figure of 148.7 million bushels. July soymeal stocks are seen increasing to 323,750 short tonnes from the 317,064 reported for June. Soyoil stocks are seen decreasing to 3.297 billion pounds in the report from 3.389 billion the previous month.

 

The U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Analysts predict soybean sales of 250,000 to 500,000 metric tonnes. Soymeal sales are seen in the 50,000 to 175,000 metric-tonne range, and soyoil sales are pegged to fall within a range of none to 20,000 tonnes.

 

In pit trades, Fimat bought 600 November, Fortis and Penson GHCO each bought 500 November, UBS Securities bought 400 November, with JP Morgan, Bunge Chicago, MF Global, Rand Financial and Shatkin/Arbor each buying 300 November.

 

On the sell side, ADM Investor Services and FCStonnee each sold 500 November, and JP Morgan sold 400 November. Speculative funds were estimated buyers of 7,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, rising in unison with soybeans. Soymeal futures benefited from soybean strength, with end-user buying, technical buying and meal/oil spreading featured. Technical buying played a key role in the advances, with advances accelerated amid the December contract's ability to pierce major moving average resistance, analysts said.

 

Soyoil futures ended higher, but continued to lose product share, with meal/oil spreading featured. The market remains in a sideways pattern after bouncing from recent lows, analysts added. Underlying commercial buying served as a supportive feature.

 

December oil share ended at 43.08% and the September crush ended at 60 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative funds estimated buyers of 3,500 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative funds estimated buyers of 2,000 lots. Commercial buying was estimated at 2,000 lots.