October 13, 2009

 

CBOT Soy Review on Monday: Rally on harvest delays; dollar weakness

 

 

Soy futures at the Chicago Board of Trade settled sharply higher Monday, rallying to six-week highs on a combination of harvest slow downs and speculative money flow into commodities, analysts said.

 

CBOT November soy finished 35 cents higher at US$9.99 per bushel.

 

December soymeal ended US$10.00 higher at US$307.30 per short tonne. December soyoil finished 135 points higher at 36.55 cents per pound. In pit trades, speculative funds were estimated buyers of 8,000 lots in soy, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

Adverse weather conditions for the harvest of the 2009 U.S. soy crop as well as cold conditions that may have damaged some immature plants provided bullish fundamentals for the market, a CBOT floor analyst said.

 

"There will be no harvest progress of significance this week through Friday," said Drew Lerner, president of World Weather Inc. "It's going to rain everywhere or snow everywhere at one time or another between now and Friday. There's just not enough of a break between the precipitation to offer an opportunity to harvest," he added.

 

The retard in harvest progress will slow the flow of soy into the cash pipeline at a time when end users are scrambling for new crop supplies.

 

Traders and analysts were also raising concerns about disease issues in the U.S. Delta. Late-season weather has taken its toll on selected soy crops in the south, with warm, humid and wet conditions in the region causing, on average, the loss of 10% to 15% of yield due to disease damage.

 

Speculative buying was featured, as weakness in the U.S. dollar continued to attract fund-based buyers. The renewed money flow into commodities is seen as a hedge by funds against inflation amid the declining U.S. dollar, a CBOT floor analyst said.

 

U.S. Department of Agriculture weekly export inspections and crop progress reports normally released on Monday will be delayed until Tuesday due to the U.S. government's closure in observance of the Columbus Day holiday.

 

 

Soy Products

 

Soy product futures soared in unison with soy Monday. Upward momentum in soymeal and soyoil were both energized by the strong gains in soy, with broad based buying across the commodity sector a bullish influence as well.

 

December oil share was 37.43%, while the November/December soy crush ended at 79 cents.