November 3, 2009

 

CBOT Soy Review on Monday: Rallies on money flow, crop uncertainties

 

 

Chicago Board of Trade soy futures ended higher Monday, spiking to session highs in late dealings on fresh speculative money flowing into the marketplace, analysts said.

 

CBOT November soy finished 19 1/2 cents higher at US$9.97 1/2 per bushel, and January soy ended 21 1/2 cents higher at US$9.98.

 

In pit trades, speculative funds were estimated buyers of 6,000 lots in soy, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

The market received a fresh dose of speculative buying to start the month, with supportive signals from outside markets and fears of field losses from recent heavy rains in the central U.S. providing fundamental justification.

 

Harvest progress will accelerate this week, but not at an overwhelming rate, said John Kleist, broker/analyst with Allendale Inc. Providing support were growing worries about field losses in the Delta and the extent of harvest progress this week amid the need for some fields to dry out before harvesting can resume.

 

The uncertainty of field losses due to heavy rains and floods in the Delta will keep risk premium in prices until there is definitive picture of output and harvest progress in the region, Kleist said.

 

The inability of futures to challenge underlying major moving average technical chart support, coupled with strong export demand, provided another bullish feature to attract the speculative money that filtered its way into the commodity sector.

 

T-storm Weather said mostly dry and sunny weather will be consistent in the central U.S. through this weekend. Temperatures will average around normal to slightly cooler than usual early in the week, but turn warm to above-average levels late in the week and weekend.

 

Some rain returns to the Midwest next week, most likely Tuesday, Nov. 10, according to T-storm Weather forecasts. Heavy rain is not likely to occur so there will be drying, and harvesting rates will improve through this weekend. Rates will slow slightly next week, but should be followed by at least a few days of drying as a typical November pattern unfolds, T-storm Weather added in the forecast.

 

U.S. Department of Agriculture reported Monday 63.7 million bushels of soy were inspected for export in the week ended Oct. 29, up 29.5% from the previous week and above pre-release trade estimates that ranged from 33 million to 50 million bushels.

 

USDA will release its weekly crop progress report at 4 p.m. EST, with harvest progress expected to be in a range of 53% to 57%, up from the prior week's 44%.

 

 

Soy Products

 

Soy product futures ended higher, rallying in unison with advances in soy. Soyoil futures garnered additional support from higher crude oil futures and fresh speculative money filtering into the market, analysts said.

 

Soymeal futures climbed in step with the rest of the soy complex, feeding off the strength in soy and lingering worries about sluggish crushing activity. The slow movement of new crop soy supplies due to harvest delays and strong bids from export channels has limited processor activity and kept nearby soymeal supplies tight, analysts said.

 

December soymeal ended US$5.70 higher at US$302.70 per short tonne, and December soyoil finished 39 points higher at 36.79 cents per pound.

 

December oil share was 37.87%, while the November/December soy crush ended at 73 1/4 cents.