September 23, 2009

 

CBOT Soy Review on Tuesday: Bounce on dollar, crop, weather concerns

 

 

Chicago Board of Trade soy futures climbed Tuesday, bouncing on weakness in the U.S. dollar and crop and weather uncertainties.

 

CBOT November soy finished 8 1/2 cents higher at US$9.22 per bushel. In pit trades, speculative fund buying was estimated at 4,000 lots in soy, and 1,000 lots in soyoil.

 

December soymeal ended US$2.50 higher at US$278.70. December soyoil finished 73 points lower at 34.92 cents per pound.

 

The declines in the U.S. dollar provided a lift to commodities in general Tuesday, and with private forecasts of a potential frost threat and tight availability of nearby supplies, futures found underlying support, analysts said.

 

The market tested both sides of unchanged levels during the day, stumbling lower through the middle of the session on seasonal pressure ahead of a potentially record fall harvest, said Bill Nelson, analyst with Doane Advisory Service in St. Louis, Mo.

 

However, sellers became cautious as the day unfolded, with some private forecasts calling for cooler weather to move into the Midwest next week enticing traders to add some premium back into prices.

 

Strong demand in the face of harvest delays in the U.S. Delta and the threat of a frost to late maturing crops provided enough fundamental strength to underpin prices, analysts said.

 

Export basis bids for soy had a firmer undertonnee at the U.S. Gulf cash grain market Tuesday on harvest delays throughout the U.S. Delta.

 

Exporters at the Gulf of Mexico are starving for supplies. The cash basis bid for September-delivered supplies are 80 cents above Chicago Board of Trade November futures and offers for November delivery are 90 cents above CBOT November soy futures, said Joe Victor, analyst with Allendale Inc.

 

The T-storm Weather forecast said rain affects the central U.S. at times through Saturday. However, it is only viewed as potentially problematic across the Delta since even light rainfall is likely to prevent soy harvesting due to heavy rainfall last week.

 

After rain ends this weekend, a cooler pattern affects the Corn Belt. "While the newest GFS weather model is colder, frostier for Tuesday and or Wednesday mornings of next week, many unresolved issues exist and we feel it is best to keep highest frost chances further to the north," T-storm Weather said in the forecast.

 

 

Soy Products

 

Soy product futures ended higher, rallying in unison with soy. Soyoil was the upside leader, buoyed by adjustments in the meal/oil spread relationship and borrowed strength from crude oil futures. Light lingering support was also generated from Monday's U.S. Department of Agriculture announcement of a 98,000 tonne sale of soyoil, Nelson said.

 

Soymeal futures managed to carve out gains, feeding off the late recovery bounce in soy.

 

December oil share was 38.54%, while the November/December soy crush ended at 75 1/4 cents.