September 27, 2007

 

CBOT Soy Review on Wednesday: Up on brazil dryness, uncertain us yields

 

 

Chicago Board of Trade soybean futures settled higher Wednesday on concerns about dry weather in Brazil and uncertainty about crop yields in the U.S., analysts said.

 

November soybeans finished 17 3/4 cents higher at US$9.90 3/4, and January soybeans ended 17 1/4 cents higher at US$10.06 1/4. December soymeal closed up US$7.20 at US$284.80 per short tonne, while December soyoil finished 35 points higher at 39.54 cents per pound.

 

Worries about dryness in key growing areas of Brazil gave soybean futures a boost, with little significant rainfall seen developing in northern Mato Grosso maybe until the first week of October, DTN Meteorlogix said. Mato Gross continued to see hot and dry weather on Tuesday, the private weather firm noted.

 

"Any early planting of soybeans in northern Mato Grosso looks to be very scattered this year," Meteorlogix said.

 

In the U.S., soybean harvest results are seen as "uncertain" so far, a CBOT floor trader said. Some ideas that the crop was bigger than the U.S. Department of Agriculture predicted are now evaporating, an analyst said.

 

There have been some reports of sudden death syndrome, the analyst said. There is "a little bit of a mixed picture" on yields, he said.

 

China's agriculture ministry said this week that soybean production in China will be cut by up to 30% because of drought damage, Meteorlogix said. The forecast for a crop reduction put even more focus on the U.S. soybean harvest, especially with the slow pace of planting in central Brazil, the firm said.

 

Commodity funds bought an estimated 5,000 contracts at the CBOT. During the day session, advances accelerated on technical buying once the January futures pierced above resistance at the US$10.00-per-bushel level, traders said.

 

The psychological impact of US$10.00 level, coupled with ideas the market needs to attract increased South American acreage as well as ration some demand, set the tonnee of the market, analysts add.

 

In other news, Asian soybean rust was discovered in Illinois, which is forecast by the USDA to be the nation's second-largest producing state in 2007. Soybean rust was confirmed on Sept. 25, on a soybean leaflet from a soybean field located in Massac County in southern Illinois, said University of Illinois extension plant pathologist Carl Bradley Wednesday, via USDA's public rust Web site.

 

The developmental stage of the soybean crop at this point in time is past the stage in which soybean rust can cause economic yield loss, Bradley said. Still, the discovery "reinforces long-term worries about the spread of that disease," an analyst said.

 

Looking ahead, the USDA is slated to release weekly export sales figures for the week ended Sept. 20 at 8:30 a.m. EDT Thursday. Trade estimates put soybean export sales at 500,000 to 800,000 metric tonnes.

 

On Friday, the U.S. Department of Agriculture is expected to report fourth-quarter soybean stocks at 552 million bushels in its quarterly grain stocks report, little changed from its September carryout estimate, analysts said. Usage numbers are seen on par with expectations, they said.

 

Despite the fact the report is a quarterly USDA report, the data are taking a back seat to new-crop production outlooks, as analysts call the numbers old news. Traders said they were not expecting the stocks report to show much of a deviation from current forecasts, based on previous revisions to domestic crush and export estimates.

 

 

SOY PRODUCTS

 

Speculative and commercial buying helped soymeal rally to new contract highs amid worries over tightening world feed supplies, traders said. December soymeal set a new contract high of US$285.50 before trimming gains a bit, traders said.

 

Commodity funds bought an estimated 2,000 soymeal contracts and 1,000 soyoil contracts. Analysts expect weekly soymeal export sales to total 75,000 to 150,000 tonnes. Soyoil export sales are seen at nothing to 20,000 tonnes.