October 6, 2009

 

CBOT Soy Review on Monday: Mixed; freeze threat provides support

 

 

Soy futures on the Chicago Board of Trade ended steady to modestly lower Monday, managing to find price support after initially sliding to 6-month lows.

 

CBOT November soy finished unchanged at US$8.85 per bushel.

 

December soymeal ended US$2.70 higher at US$270.50 per short tonne. December soyoil finished 22 points lower at 33.85 cents per pound. In pit trades, speculative fund buying was estimated at 4,000 lots in soy. Speculative funds were estimated net sellers 1,000 lots in soyoil.

 

The "wildcard" of the market remains weather, and with the threat of a growing-season-ending Midwest freeze and the potential for additional harvest delays this week, cautious traders took the opportunity to cover some shorts after recent declines, said Tim Hannagan, analyst with P.F.G Best.

 

The fear that late planted soy are not past the point of damage from a weekend freeze was enough to underpin prices, Hannagan said.

 

However, reports of robust yields from early harvests and a generalized market view that U.S. Department of Agriculture will increase its 2009 soy production estimate Friday, applied pressure to limit an upside recovery.

 

Futures initially dipped to 6-month lows in early trade, succumbing to carry-over selling from Friday's poor technical close, traders said. This theme was quickly uprooted by the exhaustion of sellers, with weather concerns and strong demand providing fundamental support.

 

A cool and wet pattern dominates the nation's mid section this week with a pair of frontal systems bringing moderate to locally heavy rains to the Midwest, according to a weather outlook from WSI's Commodities Forecast Center.

 

Widespread rains are anticipated with the first front early this week, but the heaviest rains are anticipated with a second, more well-defined cold front late this week. The axis of heaviest rainfall extends from the southern and eastern Corn Belt down into the Delta.

 

The coldest air mass of the season will arrive behind this front with season ending freezes likely in the northern and western Corn Belt this weekend and over the eastern belt early next week, the WSI forecast said. Expect morning low temperatures in the mid 20s to low 30s Fahrenheit in Minnesota and Iowa on the coldest mornings (Saturday-Tuesday), 30-35F across Missouri, while the eastern belt sees temperatures drop into the upper 20s to mid 30s F on the coldest mornings (Sunday-Wednesday), the WSI forecast said.

 

USDA will release its weekly crop progress report at 4 p.m. EDT. The trade will eagerly watch the maturity level of 2009 soy crops, as it will tell just how serious the market will take approaching freezing temperatures, Hannagan added.

 

 

Soy Products

 

Soy product futures ended mixed, with meal/oil spreading allowing meal to recoup some product share. Soymeal ended higher, recovering from an early drop to 5-month lows on initial support from soy, tight available supplies and adjustments in meal/oil spread relationship, analysts said.

 

Soyoil futures stumbled, succumbing to pressure from meal/oil spreading and early spillover weakness from crude oil futures.

 

December oil share was 38.47%, while the November/December soy crush ended at 83 3/4 cents.