September 18, 2007

 

CBOT Soy Review on Monday: Rallies to 3-year highs on bullish outlook

 

 

Chicago Board of Trade soybean futures rallied to three-year highs Monday as a bullish fundamental outlook continues to foster speculative fund buying.

 

November soybeans settled 13 3/4 cents higher at US$9.68 1/2. October soymeal settled US$4.10 higher at US$264.10 per short tonne, and December soymeal settled US$4.30 higher at US$269.70. October soyoil ended 20 points higher at 39.72 cents a pound, and December soyoil finished 19 points higher at 40.21 cents.

 

The combination of long-range bullish attributes with a supportive demand outlook, tightening inventories, the need for additional acreage and reports of frost damage in the upper Midwest provided the stimulus in the market, said John Kleist of Kleist Ag Consulting.

 

The bullish wave continues to build upon itself, with new contract highs seen throughout the soy complex.

 

The market climbed to new contract highs as traders factor in potential yield losses from a weekend freeze in the upper Midwest amid already tight projected 2007-08 ending inventory forecasts, analysts said.

 

As much as 5%-10% of Iowa's soybean crop is estimated to suffer some damage, said Palle Pedersen, extension agronomist with Iowa State University. A wet spring left the majority of soybean plantings across the state delayed, leaving a portion of full season varieties susceptible to yield losses from freezing temperatures during the weekend, he said.

 

The July 2008 futures contract breached the psychologically important US$10.00 level, climbing to an intraday high of US$10.04.

 

The DTN Meteorlogix Weather Service forecast said showers and thunderstorms will move across the central U.S. Tuesday and Wednesday; otherwise, a mostly dry weather pattern will cover the primary soybean belt during the rest of the month of September. Conditions will be generally favorable for crop maturation and harvest. Frost and freeze conditions during the past weekend caused little significant damage due to the advanced stage of soybeans, Meteorlogix said.

 

In pit trades, buyers and sellers were scattered among various commission houses. RJ O'Brien bought 500 November, Rosenthal bought 300 November, and JP Morgan sold 300 November. Speculative fund buying was estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures climbed to new life-of-contract highs Monday, bolstered by the bullish theme engulfing the entire soy complex. The potential for a sharp reduction in available soybean supplies in the 2007-08 marketing year coupled with strong domestic and export demand projections for both soyoil and soymeal are keeping speculative buyers enthused, analysts said.

 

Soyoil continues to feed off bullish world vegoil demand, supportive domestic usage from biodiesel and a rally in crude oil futures above the US$80-a-barrel level, analysts said. Supportive world feed demand and the potential for fewer soybeans from crushing served as an underlying theme to keep soymeal rising to new highs as well, analysts also said.

 

December oil share ended at 42.71%, and the November/October crush ended at 49 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses. Speculative fund buying was estimated at 2,000 lots, with ADM Investor Services a buyer of 400 December.

 

In soyoil trades, buyers and sellers were scattered among various commission houses. Speculative funds were estimated net buyers on the day, ADM Investor Services and Fimat each sellers of 400 December.