November 4, 2009

 

CBOT Soy Review on Tuesday: Climb on crop concerns, outside markets

 

 

Soy futures on the Chicago Board of Trade rallied Tuesday, climbing to one-week highs on crop concerns and outside market influences.

 

CBOT November soy finished 9 1/4 cents higher at US$10.06 3/4 per bushel, and January soy ended 12 1/2 cents higher at US$10.10 1/2.

 

In pit trades, speculative funds were estimated buyers of 4,000 lots in soy, 2,000 lots in soymeal and 1,000 lots in soyoil.

 

The recovery of outside markets, concerns about private crop estimates, fresh speculative money flowing into the market and worries about crop losses in the Delta served as catalysts to keep prices building on prior gains, analysts said.

 

Technically inspired buying was featured, with advances accelerating once active contracts managed to pierce through overhead resistance levels on technical charts.

 

Lingering fears of field losses and quality issues, as a result of heavy rains and floods in southern U.S. crop areas, have sparked enough concern to justify speculative buying interest, said Jack Scoville, analyst with Price Futures Group.

 

"There is too much uncertainty surrounding the 2009 U.S. soy crop, with nothing to compare it to, for traders to extract risk premium from prices," a cash-connected CBOT floor analyst said.

 

Until a definitive answer is available regarding a crop that faced planting issues, a cool growing season and a fall harvest that endured record rains and frost, futures will remain underpinned, he added.

 

Providing support were tight nearby supplies and the realization that newly harvested supplies will not flood the pipeline but rather head straight to export channels, as processors continue to scramble for available supplies, Scoville added.

 

However, warm, dry near-term weather favorable for active field work this week applied modest pressure to cap upside movement.

 

The DTN Meteorlogix weather forecast calls for drier and increasingly warmer weather in both the Midwest and Delta. This trend will help improve conditions for the harvest of summer crops at least the next six days or so, Meteorlogix said.

 

Forecast models continue to indicate a "trough west-ridge east upper air pattern" developing during the time frame ending Friday, Nov. 13, Meteorlogix forecasts. This feature is associated with increased chances for rain in the Midwest, and indicates at least some showers and potential harvest delays going into the middle of the month, Meteorlogix added.

 

On tap for Wednesday, commodity brokerage firm FCStonnee and private analytical firm Informa Economics will release production estimates ahead of next week's government crop update. U.S. Department of Agriculture will release its November crop production report Tuesday, Nov. 10.

 

 

Soy Products

 

Soy product futures ended higher, rallying in step with soy futures. Soyoil futures garnered additional support from a recovery in crude oil futures.

 

December soymeal ended US$3.70 higher at US$306.40 per short tonne, and December soyoil finished 74 points higher at 37.53 cents per pound.

 

December oil share was 37.86%, while the November/December soy crush ended at 80 1/4 cents.