October 20, 2009

 

CBOT Soy Review on Monday: Adds risk premium on harvest threats

 

 

Chicago Board of Trade soy futures rallied Monday, inputting risk premium back in the market on the threat of harvest delays, as rains are forecast to return to the Midwest.

 

CBOT November soy finished 18 3/4 cents higher at US$9.96 1/4 per bushel, and January soy ended 18 1/2 cents higher at US$10.00 1/2.

 

December soymeal ended US$3.60 higher at US$298.30 per short tonne. December soyoil finished 65 points higher at 37.59 cents per pound. In pit trades, speculative funds were estimated buyers of 4,000 lots in soy, and 1,000 lots in soyoil.

 

The market spiked on the threat of harvest disruptions, as Midwest rains are expected to keep nearby inventories tight, at a time when exporters and processors and scrambling for available supplies, analysts said.

 

Weather was the dominant issue in the market, as the trade grows weary of potential field losses the longer the soy crop sits in the field in wet, cool temperatures.

 

Meanwhile, the market also received a boost from speculative buying, with weakness in the U.S. dollar and strength in U.S. equity markets providing support to aid the bullish tonnee as well.

 

Cropcast Weather Services said dry conditions are currently prevailing across much of the Midwest and Delta, which is benefiting summer crop drydown and harvesting. However, another vigorous storm system is expected to push into the region mid- and late week, spreading wet weather across the Midwest and Delta. This will slow summer crop drydown as well as any fieldwork.

 

Looking ahead to the 6-10 day period, showers should move out of the eastern Midwest early, while another storm is expected in northwestern areas late. The Delta should trend drier, Cropcast said in the forecast.

 

U.S. Department of Agriculture reported soy inspected for export in the week ended Oct. 15 totaled 39.092 million bushels, up 54.5% from the previous week. The figure was above trade expectations of 15 million to 30 million. The primary destination was China with 30.885 million bushels.

 

USDA will release its weekly crop progress report at 4 p.m. EDT, with harvest progress expected to be in a range of 33% to 35%, up from the prior week's 23%.

 

 

Soy Products

 

Soy product futures ended higher across the board, feeding off the bullish momentum from soy futures. Soyoil futures regained product share value on adjustments in the meal/oil spread relationship, with supportive outside market influences underpinning prices, analysts said.

 

Soymeal futures ended higher in step with soy, underpinned by worries of limited availability of soy supplies for crushing the longer the 2009 soy harvest is drawn out, analysts said. However, the market lost ground to oil on spread adjustments.

 

December oil share was 38.62%, while the November/December soy crush ended at 73 1/2 cents.