November 17, 2009

 

CBOT Soy Review on Monday: Rally on broad-based commodity strength

 

 

Soy futures on the Chicago Board of Trade ended higher Monday, rallying on broad-based speculative buying in commodities amid weakness in the U.S. dollar.

 

CBOT Jan soy ended 23 cents higher at US$10.10, and March soy settled 23 1/2 cents higher at US$10.15 3/4.

 

In pit trades, speculative funds were estimated buyers of 5,000 lots in soy, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

Money flowed into the commodity sector Monday, as investors exiting the U.S. dollar looked to hard assets like commodities for their upward potential due to inflationary signals, analysts said.

 

The U.S. dollar index fell to its lowest level since August 2008 and, with gold futures rising to record highs, crude oil, grains and oilseed futures all followed that lead.

 

The market also gathered fundamental support, with strong demand and the potential for wet Midwest weather to slow the final leg of the U.S. soy harvest adding strength, said Tim Hannagan, analyst with P.F.G. Best in Chicago.

 

Bearish supply side fundamentals, with a record U.S. harvest and outlooks for record crop potential in South America were cast aside by outside market support.

 

Technical buying played a key role in the gains as well, with preplaced buy orders accelerating advances once the most active January contract climbed above the psychological US$10.00 level and Friday's highs.

 

T-storm Weather said rain will spread across the southeast two-thirds of the corn-belt from Tuesday through Wednesday-Thursday slowing and stopping harvesting. Four to-seven days of drying follows the end of precipitation, with the next rain chance late this weekend and early next week. This pattern leaves the northwest third of corn and soy dry over the next week with improved harvesting rates, T-storm Weather said.

 

In Argentina, several rounds of thunderstorms occur over the next week as short-term dryness issues end for most. One to two inch rain affects much of the soy belt with 2 inch to 3 inches in parts of Cordoba, Santa Fe, Entre Rios, and far northern Buenos Aires, T-storm Weather added.

 

U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EST, with harvest progress expected around 90%, up from the prior week's 75%.

 

 

Soy Products

 

Soy product futures spiked in unison with soy. Soyoil futures rose to 5-month highs, energized by commodity wide price strength, in particular crude oil futures. Underlying demand was a supportive feature, enabling soyoil to gain product share value.

 

Soymeal futures ended higher, buoyed by strength in soy. However, advances were limited by adjustments in the meal/oil spread relationship.

 

December soymeal ended US$3.30 higher at US$304.40 per short tonne, and December soyoil finished 116 points higher at 39.77 cents per pound.

 

December oil share was 39.54 while the January/December soy crush ended at 75 1/4 cents.