October 11, 2007

 

CBOT Soy Review on Wednesday: Rises on positioning, acreage fears

 

 

Chicago Board of Trade soybean futures rose Wednesday on position-squaring and fears the government will cut its estimate for U.S. harvested acreage, floor traders said.

 

November soybeans closed up 18 cents at US$9.68 1/4 per bushel, and January soybeans climbed 18 cents to US$9.86 3/4. December soymeal finished US$5.80 higher at US$274.90 per short tonne, and December soyoil climbed 48 points to 39.47 cents per pound.

 

Prices jumped on short-covering ahead of the release of the U.S. Department of Agriculture's October supply and demand report, traders said. The report is due out at 8:30 a.m. EDT Friday.

 

There are concerns the USDA will lower its forecast for harvested acreage and production, said Tim Hannagan, analyst for Alaron Trading in Chicago. Heavy rains late in the development season may have drowned out some low-lying fields and could lead the government to increase its projection for abandonment, he said.

 

Traders evened up their positions amid ideas the harvested acreage number could fall by 1-to-2 million acres, a CBOT floor trader said.

 

"We had so much rain" in northern Iowa and in central and southern Illinois, Hannagan said. "There's at least some suggestion that ... the government may decide to come in and say those acres were lost."

 

The average of analysts' pre-report estimates for soybean production is 2.648 billion bushels, with a yield of 41.9 bushels per acre, according to a Dow Jones Newswires survey. In September, the USDA pegged the soybean crop at 2.619 billion bushels, with a yield of 41.4 bushels per acre.

 

But if there is going to be a surprise in Friday's report, it most likely will be for soybeans, Hannagan said.

 

"There was a lot of the talk that the low-lying areas were like lakes," he said. "That's to be seen. I think that's the fear in the market."

 

Hot, dry conditions in soybean-growing areas of Brazil also remained a supply concern, traders said. Brazil's northern soybean belt will be hot and dry until the end of the week, DTN Meteorlogix said.

 

However, there are hopes that weekend rains my allow planting to speed up, traders said. There is a chance for scattered showers and thunderstorms, which may be enough moisture to spur planting of soybeans, Meteorlogix said.

 

China was on a long National Day holiday last week but has provided the CBOT with "renewed vigor" now that it is back, an analyst said. There was early support from market chatter about possible sales to China, a floor trader said.

 

Commodity funds bought an estimated 4,000 contracts, and commercials bought an estimated 3,000 contracts. In pit trades, ADM bought 800 May and 500 January, while Kottke bought 500 March.

 

 

SOY PRODUCTS

 

CBOT soy product futures closed higher with soybeans. Soymeal followed soybeans and corn higher, while soyoil felt spillover support from soybeans and palm oil, traders said.

 

Commodity funds bought an estimated 2,000 soymeal contracts and 2,000 soyoil contracts. In soymeal pit trades, Fimat bought 500 December and sold 200 December. In soyoil trades, USA Trading bought 400 December and 100 May, while JP Morgan bought 400 December and 300 May.