March 4, 2008

 

CBOT Soy Review on Monday: Soybeans, soyoil reach new highs

 

 

Chicago Board of Trade soybean and soyoil futures Monday hit new all-time highs on strong demand and overseas rallies, analysts said.

 

May soybeans closed up 23 cents at US$15.59 1/2 per bushel after reaching a new high of US$15.86 1/2. May soyoil ended limit up, or 200 points higher, at 70.82 cents per pound. May soymeal rose US$1 to US$383.20 per short tonne.

 

Record-breaking gains in foreign markets helped push the CBOT soy complex sharply higher, traders said. Soybean futures traded on the Dalian Commodity Exchange settled at new records Monday, driven by surging vegetable oil prices.

 

Crude palm oil futures on Malaysia's derivatives exchange, meanwhile, reached a record high. Heavy buying supported the gains, along with an ongoing rally in soyoil prices and anticipated demand from India and China, trade participants said.

 

There also was support from news that India's rapeseed production in 2008 is expected to drop 15.4% from 2007, said Mike Zuzolo, analyst for Risk Management Commodities. Lower-than-usual rapeseed output in India and China this year is expected to boost demand for both soyoil and palm oil, traders said.

 

"With another round of limit-up buying in the Dalian market last night and new news that India's rapeseed output could drop over 15% this year due to poor weather, the oilseed markets around the world continue to scramble," Zuzolo said.

 

India's rapeseed production is seen falling to 5.09 million metric tonnes due to a decline in cultivated area and unfavorable weather, said Central Organization of Oil Industry and Trade, the lobbying group for India's vegetable oil traders. However, total oilseed output in the whole crop marketing year ending October 2008 is expected to rise to 25.49 million tonnees from 22.97 million tonnees a year earlier, because of a good summer harvest, the group said.

 

Gains in outside markets, including crude oil and gold, also helped boost the soy complex, traders said. Crude oil, for one, topped the inflation-adjusted high set in April 1980, as the U.S. dollar's descent continued to send investors into the commodities markets.

 

"I think the crude oil and the gold market have certainly helped add and extend gains," Zuzolo said. "Now we've got some technically charged contracts."

 

With the March beans taking out the US$15.50 level and the May running above US$15.80, the upside potential exists for the May contract to climb another US$1.20, Zuzolo said.

 

July soybeans, meanwhile, approached the landmark price of US$16 during the session. The contract traded as high as US$15.96 before backpedaling a bit with the rest of the soy complex.

 

Commodity funds bought an estimated 4,000 contracts. Deliveries posted against the CBOT March soybean future were 358 contracts. The last trade assigned was Feb. 25.

 

 

Soy Products

 

CBOT soy product futures ended higher, with soyoil futures closing limit up after hitting new all-time highs. Limit-up May soyoil hit a new high of 70.82. March soyoil is trading without limits because it is in delivery and finished 224 points higher at 70.40.

 

A rally in Malaysian palm oil and expectations for strong Asian demand boosted CBOT soyoil, traders said. A weaker U.S. dollar and firmer outside markets also were supportive, they said.

 

Soymeal was a follower of soybeans and soyoil during most of the day session and stumbled late on profit-taking, traders said. Commodity funds bought an estimated 4,000 soyoil contracts and 2,000 soymeal contracts.

 

JP Morgan bought 500 May soymeal and sold 600 May soymeal. JP Morgan bought 700 May soyoil and sold 300 December soyoil. Goldenberg Hehmeyer bought 700 December soyoil.

 

Deliveries posted against the CBOT March soyoil future were 740 contracts. The last trade assigned was Feb. 28.

 

Deliveries posted against CBOT March soymeal were 567 contracts. The last trade assigned was Feb. 28.