September 9, 2009

 

CBOT Soy Review on Tuesday: Bounce; garners strength from outside markets

 

 

Soy futures on the Chicago Board of Trade bounced Tuesday, managing to find price support from bullish outside financial market influences.

 

CBOT September soy futures settled 8 cents higher at US$9.69 per bushel, and November soy finished 14 1/2 cents higher at US$9.36 1/2 per bushel. In pit trades, speculative fund buying was estimated at 5,000 lots in soy, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

September soymeal settled US$11.30 higher at US$343.50 per short tonne, and December soymeal ended US$3.40 higher at US$284.50. December soyoil finished 57 points higher at 34.80 cents per pound.

 

Weakness in the U.S. dollar provided strength to commodities in general, opening the door for futures to climb after dropping nearly 9% of their value in the previous week.

 

"The market was giving a reprieve from its recent slide, with support from outside markets helping futures unwind oversold conditions," said John Kleist, broker/analyst with Allendale Inc.

 

A quiet news front kept attention on movements in the U.S. dollar, crude oil and precious metals, with traders saying large 2009 U.S. soy production estimates and a lack of weather threats for the crop were already factored into prices.

 

Meanwhile, tight supply fundamentals remain an underpinning feature. Forecasts for potentially record demand for U.S. soy inventories until South American supplies come back on line next spring is a bullish factor for prices, said Sid Love of Kropf and Love Consulting.

 

The market has dialed in a big crop, but how big will demand be is the key that is helping limit downside movement as well, Love added.

 

Tuesday's price gains helped stem a bearish tide in the market, as the potential for record crops amid ideal weather conditions enticed traders into extracting risk premium recently. The market found some support despite private forecasts of a bumper crop, as you "don't count your pods until they are harvested," said Kleist.

 

The crop still needs to avoid a freeze in September to achieve lofty expectations, so the market will continue to find support until the crop finishes, he added.

 

The DTN Meteorlogix Weather forecast for the Midwest calls for cool but not cold Midwest temperatures. Crops will continue to benefit from near to above normal temperatures for at least the next seven days and probably the next ten days.

 

 

Soy Products

 

Soy product futures settled higher with soy. Soyoil futures rallied, garnering strength from crude oil as well as soy. Supportive outside market influences bolstered gains in the market, enabling soyoil to gain some product share on oil/meal spreading.

 

Soymeal climbed with the rest of the complex, staging a modest technical recovery after last weeks' declines.

 

December oil share was 37.86%, while the November/December soy crush ended at 72 1/4 cents.