June 26, 2008
CBOT Soy Review on Wednesday: Rallies; weather, technicals buoy markets
The combination of bullish weather forecasts, technical strength and the uncertainties of the market combined to buoy soybean futures at the Chicago Board of Trade Wednesday.
July soybeans settled 36 1/2 cents higher at US$15.37 1/2 and November soybeans ended 34 cents higher at US$15.25. July soymeal settled US$8.90 higher at US$410.20 per short tonne. December soyoil finished 111 points higher at 64.21 cents per pound.
Weather was a key influence on the overall theme in the market, with heavy storms expected to disrupt planting progress and crop development in the U.S. Midwest encouraging traders to add some risk premium back into futures, said John Kleist, broker/analyst at Allendale Inc.
Technical buying fueled the gains as well, with the inability of the market to challenge support at Monday's lows generating short-covering interest, he added.
Meanwhile, the uncertainties of 2008 acreage and future demand continues to provide an unclear picture for the market, and that remains a supportive feature to keep sellers less than aggressive, analysts said.
"There is just to much uncertainty in the market heading toward Monday's key crop reports, and that will continue to provide volatile trade, with futures overdue for a bounce after recent corrective setbacks," a CBOT floor broker said.
Firm cash basis levels amid strong demand and a lack of farmer selling aided the gains, with a lack of clarity in the Argentina situation providing enough doubt to pull speculative buying off the sidelines, he added.
The DTN Meteorlogix forecast calls for rainfall of up to 2.5 inches during the next three days. This rain will keep soils saturated, and may result in some renewed flooding. In addition, field work and replanting efforts will be held back by the rainfall.
The next 10 days continue to feature the prospect for renewed rains over the U.S. Corn Belt. The rains will be accompanied by a mixed temperature trend - warm in the western Midwest and cool over the eastern Midwest. As a result, this outlook keeps the uneven development trend in place for the 2008 corn and soybean crop, Meteorlogix said.
On tap for Thursday, the Census Bureau's crush report is scheduled for release Thursday at 8 a.m. EDT (1200 GMT) U.S. soybean crush for May is expected to be 152.8 million bushels in the U.S. Census Bureau's monthly report, up from the April crush figure of 149.2 million bushels. May soymeal stocks are seen declining to 310,800 short tonnes from the 342,900 tonnes reported for April. Soyoil stocks are seen increasing to 2.955 billion pounds in the report from 2.925 billion the previous month.
The U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Trade estimates put old-crop soybean export sales at net cancelations of 300,000 to 150,000 metric tonnes. New-crop soybean sales are seen in a range of 2.240 million to 2.500 million metric tonnes. Soymeal sales are projected in a range of 75,000 to 175,000 metric tonnes, with soyoil sales expected in a zero-to-10,000-tonne range.
In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.
SOY PRODUCTS
Soy product futures soared in unison with soybeans, rallying on a speculative-led price recovery. Soyoil futures traded outside higher days on technical charts, managing to recover from early declines as buyers re-emerged after selling was exhausted amid the market's failure to challenge key underlying major moving average support, said John Kleist, broker/analyst at Allendale Inc.
Soymeal futures leaped in step with the rest of the complex, buoyed by strong underlying demand and technical strength.
July oil shares ended at 43.9% and the July crush ended at 71 1/4 cents.
In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.
In soyoil trades, buyers and sellers were scattered among various commission houses.
