October 22, 2009

 

CBOT Soy Review on Wednesday: Rallies on sliding dollar, harvest delays

 

 

The sliding U.S. dollar and harvest delays served as a formidable duo to send Chicago Board of Trade soy futures rallying to seven-week highs Wednesday.

 

CBOT November soy finished 26 cents higher at US$10.08 1/2 per bushel, and January soy ended 24 1/2 cents higher at US$10.09 3/4.

 

December soymeal ended US$6.20 higher at US$298.70 per short tonne. December soyoil finished 109 points higher at 38.56 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.

 

Commodity-wide buying took place Wednesday, with crude oil rising above US$81 a barrel and the U.S. dollar taking out its recent lows uncovering fresh speculative-based buying, said Mike Zuzolo, president Global Commodity Analytics and Consulting.

 

Traders said speculative buying is entering grain and oilseed futures as they are seen as undervalued commodities in comparison to the price gains seen in energy and metal futures.

 

The outside markets were a dominant influence on prices, with wet, cool weather expected to further delay the 2009 U.S. soy harvest providing some fundamental justification for gains.

 

"Weather model updates indicate that once the rains start in the Midwest Thursday and Friday, it's going to be very difficult for the central and eastern corn-belt to return to the fields between this weekend and the 30th of October," Zuzolo said.

 

The resumption of poor harvest weather is raising concerns of possible field losses the longer the soy crop sits in the field in wet, cool conditions, said Anne Frick, senior oilseed analyst with Prudential Bache.

 

Technically inspired buying was featured as well, with advances accelerating once pre-placed buy orders were activated as nearby contracts pierced through resistance at the psychologically significant US$10.00 per bushel level.

 

T-storm Weather said after unseasonably heavy rain in the U.S. Midwest end Friday and Saturday, another round of showers will slide across the corn-belt Sunday and Monday.

 

Next week, unseasonably cold air in Canada interacts with warmth across the southern U.S. A large storm system results with cooler-than-average weather for most corn and soy areas, T-storm Weather forecasts. Substantial rainfall will move across the southeast third to half of the Midwest around next Wednesday with lower chances to the northwest. This next rain chance will be the main focus of future weather outlooks, as it will determine the length of the next drying window, T-storm added in its forecast.

 

On tap for Thursday, U.S. Census Bureau is expected to estimate the September soy crush at 113.7 million bushels, down from last month on the tightness of available soy supplies, according to a survey of industry analysts. The Census Bureau's crush report is scheduled for release Thursday at 8 a.m. EDT (1200 GMT).

 

U.S. Department of Agriculture is scheduled to release its weekly export sales report Thursday at 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Oct. 15 to be in a range of 550,000 to 900,000 metric tonnes. Soymeal export sales are seen between 100,000 and 275,000 tonnes, while soyoil sales are pegged between 10,000 and 25,000 tonnes.

 

 

Soy Products

 

Soy product futures ended higher across the board, bouncing in unison with the price gains in soy. Soyoil rallied on spillover strength from soy as well as a surge in crude oil futures above the US$81.00 a barrel level. The most active Dec contract rallied to a 10-week high.

 

Soymeal futures ended up with the rest of the complex, feeding off strength from soy and broad based commodity strength.

 

December oil share was 39.18%, while the November/December soy crush ended at 72 3/4 cents.