August 29, 2009

 

CBOT Soy Review on Friday: Rise on tight stks, crop uncertainties

 

 

Chicago Board of Trade soy futures climbed Friday, garnering strength from tight old crop inventories and uncertainty tied to new crop production potential.

 

CBOT September settled 21 1/2 cents higher at US$11.35 3/4, and November soy finished 15 cents higher at US$10.11. In pit trades, speculative fund buying was estimated at 4,000 lots in soy, and 1,000 lots in soymeal. Fund selling in soyoil was 1,000 lots.

 

September soymeal settled US$8.00 higher at US$387.00 per short tonne, and December soymeal ended US$12.00 higher at US$308.50. December soyoil finished 14 points lower at 36.69 cents per pound.

 

Tight supplies remain the underlying driver pushing spot futures to new highs for the current uptrend, as the market attempts to lure supplies into the cash pipeline until new crop supplies surface from early harvests, analysts said.

 

Strong export demand was a supportive force as well, with traders concerned about the lack of a supply buffer from old crop to new crop harvests to handle nearby needs through the first half of September.

 

New crop futures were pulled higher with the front month, as traders keep risk premium in the market amid the uncertainties of yield in the face of a late maturing crop.

 

Weather is always important for soy, but because the crop was planted so late and the Midwestern growing season has been so cool, worries about an early frost are heightened, especially with very thin old-crop stocks.

 

T-storm Weather said unseasonably cool weather will occur this weekend and into early next week in the U.S. Midwest. Low temperatures in the 40s Fahrenheit will be common with a few upper-30s F. Frost isn't expected because ground temperatures are too warm despite the cool air mass.

 

Next week, the central U.S. becomes divided by warmth in the west and coolness in the east. A few thunderstorms will occur in the Plains and western Corn Belt, but widespread and heavy rain is not expected as most stay dry. Frost remains unlikely through at least next weekend. Beyond next weekend, forecasting weather is difficult, but climatology and an expected stalling of the weather pattern means that the risk for an early frost is not currently higher than usual, T-storm Weather said.

 

First notice day for September futures is Monday, with analysts anticipating no deliveries against CBOT September soy, and soymeal contracts. Soyoil delivery notices are expected in a range of 2,000 to 4,000 contracts.

 

 

Soy Products

 

Soy product futures ended mixed, with soymeal rising on tight availability of nearby supplies and the uncertainty of new crop soy yields amid the need for an extended growing season.

 

Soyoil futures stumbled, succumbing to meal/oil spreading and a lack fresh fundamental support in the face of ample nearby supplies.

 

December oil share was 37.35%, while the November/December soy crush ended at 71 1/4 cents.