November 10, 2009

 

CBOT Soy Review on Monday: Climbs on speculative buys, outside markets

 

 

Chicago Board of Trade soy futures climbed Monday, buoyed by speculative fund buying amid bullish outside financial market influences.

 

CBOT November soy finished 16 1/4 cents higher at US$9.64 1/4 per bushel, and January soy ended 17 cents higher at US$9.72.

 

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

 

The weaker U.S. dollar triggered broad-based speculative buying across the commodity sector, with the evening of previously sold positions ahead of Tuesday's crop production report buoying prices as well, analysts said.

 

The outside markets overshadowed favorable harvest conditions, providing an opportunity for recent sellers to buy back previously sold positions in an effort to reduce risk exposure ahead of the government's soy production update.

 

Aside from the outside markets, futures had little fresh bullish news to use as a rallying cry, but supportive weekly export inspections were another sign of good export demand, analysts added.

 

With harvest moving closer to completion, seasonal pressure is expected to diminish, as grain elevators reduce their hedging needs, a cash connected floor broker said.

 

The DTN Meteorlogix weather forecast said mostly dry conditions are on tap for central U.S. crop areas this week. There may be some increased shower threats later this week or during the weekend. However, for this time of year, this weather pattern is as good as can be expected for harvest activities, Meteorlogix said.

 

In the Delta, it does not appear likely that rainfall associated with Hurricane Ida will reach into the key growing areas; in fact, it looks as if the system will take away some of the rain chances, Meteorlogix added.

 

The USDA is scheduled to release its weekly crop progress report at 4 p.m. EST, with harvest progress expected to be in a range of 70% to 80%, up from the prior week's 51%.

 

The USDA is scheduled to release its November crop report Tuesday at 8:30 a.m. EST. Most analysts surveyed anticipate a modest increase in Tuesday's 2009 soy crop production estimate. On average, 24 analysts participating in a Dow Jones Newswires survey projected a crop size of 3.269 billion bushels with a yield of 42.7 bushels per acre. The estimates ranged from 3.187 billion to 3.379 billion bushels for production and 41.6 to 44.1 bushels an acre for yields.

 

 

Soy Products

 

Soy product futures soared in unison with soy. Soyoil futures managed to retrace Friday's losses, feeding off outside support from a surge in crude oil futures and technically inspired buying interest.

 

Soymeal futures followed the path of soy, with short-covering following last week's price setbacks aiding the advances. However, the market did lose some product share value on adjustments in the meal/oil spread relationship.

 

December soymeal ended US$5.50 higher at US$294.30 per short tonne, and December soyoil finished 100 points higher at 37.77 cents per pound.

 

December oil share was 39.09%, while the November/December soy crush ended at 98 3/4 cents.