August 31, 2007
CBOT Soy Review on Thursday: Leaps higher on technicals, spillover
Technical buying, fears about yield loss and spillover support pushed Chicago Board of Trade soybean futures higher Thursday, with November soybeans hitting their highest price in more than a month, traders and analysts said.
September soybeans rose 12 cents to US$8.70 1/2 a bushel, while November soybeans closed up 10 3/4 cents at US$8.85.
September soymeal finished US$5 higher at US$240 a short tonne, and December soymeal settled US$4.10 higher at US$246.60. September soyoil closed 7 points higher at 36.33 cents a pound, and December soyoil finished 6 points higher at 37.05.
Technical support came in for soybeans as the November contract moved above US$8.88 1/2, said Mike Zuzolo, analyst with Risk Management Commodities Inc. The contract climbed to a session high of US$8.93 1/2, the highest price since July 20, before trimming gains.
Commodity funds bought an estimated 6,000 contracts. In pit trades, Tenco bought 1,000 November, while Goldenberg Hehmeyer sold 1,200 November. ADM bought 600 November.
Uncertainty about U.S. soybean yields also was supportive for the market, Zuzolo said. Among other worries, there are concerns excessively wet weather in some areas of the Midwest will cause sudden death in plants, he said.
It appears as though the corn market is accepting bearish crop estimates released last week by Pro Farmer but the soybean market is not, Zuzolo said. CBOT corn futures ended mostly lower Thursday, pulling back from earlier gains.
Pro Farmer, also known as Professional Farmers of America, estimated 2007 U.S. corn production at 13.109 billion bushels, with a yield of 153.47 bushels an acre. The firm pegged U.S. soybean production at 2.658 billion bushels with a per-acre yield of 42.0 bushels.
In August, the U.S. Department of Agriculture estimated corn production at 13.054 billion bushels, with a yield of 152.8 bushels an acre. Soybean production was estimated at 2.625 billion bushels with a yield of 41.4 bushels an acre.
"The beans are making their ways back up toward the highs, completely ignoring the Pro Farmer numbers," Zuzolo said.
There also was spillover support for soybeans from sharp gains in CBOT wheat futures, a floor broker said. CBOT December wheat rallied to a new all-time high on technical buying and demand.
In other news, weekly U.S. soybean export sales were at the low end of trade estimates and seen as disappointing, an analyst said. The USDA reported old-crop sales ofnegative 82,500 metric tonnes and new crop sales of 404,100 tonnes for a total of 321,600 tonnes.
However, the export news didn't impact trading much, CBOT floor traders said.
"This whole market has for the last 30 days been all supply driven," Zuzolo said. "Very little has been said about demand."
Analysts expect deliveries against the CBOT September soybean contract to be 800 to 2,500 lots, with most analysts leaning toward a range of 1,000 to 2,000 lots. There doesn't appear to be any economic incentive based on cash prices for commercials to be aggressive stoppers of deliveries at this point, and that should attract some deliveries, analysts said.
SOY PRODUCTS
CBOT soy product futures ended higher with soybeans amid fund and commercial buying. Commodity funds bought an estimated 3,000 soymeal contracts and 1,500 soyoil contracts.
Commercials bought an estimated 1,000 soyoil contracts. In soymeal pit trades, Tenco bought 800 December and Iowa Grain bought 600 December, while Bunge sold 500 December.
Soyoil delivery notices are expected in a range of 1,000 to 4,000 contracts, while soymeal deliveries are seen between zero and 200 lots, analysts said.
Holders of soyoil receipts may be willing to put out a large quantity because of large available soyoil inventories and because demand from the biodiesel industry isn't reaching levels that will draw down current inventories, traders said. Strong domestic usage of soymeal and only a small amount registered at CBOT should promote small deliveries against September soymeal, analysts said.
