October 30, 2009

 

CBOT Soy Review on Thursday: Rally on broad-based gains, quality issues

 

 

Soy futures on the Chicago Board of Trade bounced Thursday, rallying from prior losses on broad-based commodity strength and quality issues in the Delta.

 

CBOT November soy finished 17 cents higher at US$9.85 1/2 a bushel, and January soy ended 16 1/2 cents higher at US$9.87.

 

December soymeal ended US$4.00 higher at US$295.30 a short tonne. December soyoil finished 66 points higher at 37.52 cents a pound. In pit trades, speculative funds were estimated buyers of 4,000 lots in soy and 1,000 lots each in soyoil and soymeal.

 

The market added some premium back into prices, as tight cash pipeline supplies and concerns that heavy rains in the Delta are causing disease and quality losses underpinned prices.

 

Weakness in the U.S. dollar generated commodity-wide strength, with higher equities adding to the bullish theme, analysts said.

 

The outside markets provided support, but soy have bullish fundamentals to buoy prices, said Mario Balletto, an analyst with Citigroup in Chicago.

 

Favorable harvest-weather forecasts for next week were put aside, as the market bumped up prices amid the need to extract supplies from farmers due to tight cash-market inventories, Balletto added.

 

The soy pipeline hasn't been filled, and with processors having trouble producing high-protein meal due to lower-quality beans from the Delta and exporters bidding up prices, futures are expected to remain firm until new-crop soy flow freely through the pipeline, a CBOT cash-connected floor broker said.

 

The DTN Meteorlogix weather forecast calls for rain and thunderstorms this week that should further delay central U.S. harvests. This is especially the case in the southern and eastern belt where rain so far this week has been heavier and where rain during the next 24 to 48 hours looks heavier as well.

 

The T-storm Weather forecast said uncertainty has increased slightly for late next week and beyond. Beginning late next week and through next weekend [Nov. 5-8], mostly dry weather is expected. The latest GFS weather model has complicated the forecast by showing rain across many corn, soy and wheat areas during this time. While its wetter outlook is unlikely, it can't be fully ruled out, T-storm Weather said in the forecast.

 

Meanwhile, first-notice day for November soy futures Friday isn't expected to produce any deliveries, analysts said. Tight inventories, with solid export and domestic crusher demand and uncertainty surrounding the quality of new-crop soy from the Delta, are expected to keep supplies in firm hands on first-notice day.

 

 

Soy Products

 

Soy product futures pushed higher, climbing in step with soy. Soyoil futures managed to retrace Wednesday's setback, underpinned by rallying crude oil futures and supportive stocks data released by the Census Bureau, analysts say. The U.S. Census Bureau Thursday downwardly revised its September soyoil stocks estimate 140 million pounds to 2.739 billion from its preliminary estimate of 2.880 billion pounds, according to the Census Bureau's Fats and Oils stocks report.

 

Soymeal futures climbed, following soy on concerns about soy quality and processor's ability to produce high-protein meal, analysts said.

 

December oil share was 38.9%, while the November/December soy crush ended at 77 cents.