CBOT Soy Review on Wednesday: Settles up on month-end buys, strong demand

 

 

Chicago Board of Trade soybean futures settled higher Wednesday, rising on month-end position-evening and solid underlying demand.

 

CBOT November soybeans finished 10 cents higher at US$9.27 per bushel.

 

December soymeal ended US$0.70 higher at US$285.50. December soyoil finished 48 points higher at 34.33 cents per pound. In pit trades, speculative fund buying was estimated at 4,000 lots in soybeans, and 2,000 lots in soyoil.

 

The combination of strong export demand, tight availability of near-term supplies and slow harvest progress provided enough support to entice traders to book profits on short positions to end the month and quarter, analysts said.

 

Bearish quarterly stock, 2008 crop production revisions and prospects for a record 2009 crop weighed on prices initially. However, although the market understands there is a big crop coming, with delays to harvests in the Delta keeping crushers and exporters starving for supplies, traders added some price support as an incentive to get fresh beans to the marketplace, said Joe Victor, analyst with Allendale Inc.

 

Weakness in the U.S. dollar and sharp gains in crude oil futures fed into soybean's upward movement as well.

 

Nevertheless, soybean remained trapped in a trading pattern, anchored by record new crop potential while strong demand and tight supplies buoyed the market, Victor said.

 

Looking ahead, traders anticipate soybeans will remain range-bound, with traders taking a cautious approach until actual yield reports can be reported from harvest in the heart of the Midwest crop belt.

 

The U.S. Department of Agriculture reported quarterly soybean stocks as of Sept. 1 at 138 million bushels, above the average analyst estimate of 111 million bushels. 2008 soybean production was revised to 2.97 billion bushels, up 7.83 million bushels from the previous estimate.

 

On tap for Thursday, the USDA is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires estimate soybean sales for the week ended Sept. 24 to be in a range of 650,000 to 1 million metric tonnes. Soymeal export sales are seen between 75,000 and 215,000 tonnes, while soyoil sales are pegged between 125,000 and 220,000 tonnes.

 

Soy products 

 

Soy product futures ended higher, responding to spillover support from soybeans. Soyoil was the upside leader of the products, bouncing on adjustments in oil/meal spreads. Bullish outlooks for soyoil as a percentage of overall product value amid strong export demand and tight South American supplies underpinned the market, analysts said. Spillover support from a jump in crude oil futures was uplifting to soyoil as well.

 

Soymeal managed to edge higher, feeding off advances in soybeans, but gains were capped by oil/meal spreads.

 

December oil share was 37.54%, while the November/December soybean crush ended at 76 3/4 cents.