July 1, 2008


CBOT Soy Review on Monday: Soars to record highs; tight stock forecasts



Chicago Board of Trade soybean futures rallied Monday on tight supply forecasts, with the nearby July future propelling to a new all-time high.


July soybeans settled 23 1/2 cents higher at US$16.05 and November soybeans ended 14 1/2 cents higher at US$15.74. December soymeal settled US$2.30 higher at US$412.00 per short tonne. December soyoil finished 39 points higher at 67.75 cents per pound.


A tight ending-stock forecast that is seen carrying through the 2008-09 marketing year served as the catalyst for the advances, as the market continues to seek price levels that will ration demand, said Jack Scoville, analyst with Price Futures Group in Chicago.


The market initially had a negative reaction to U.S. Department of Agriculture acreage and quarterly grain stocks forecasts that were above the average of trade estimates.


However, the market quickly downplayed the significance of the data, with traders and analysts looking at the big picture, as current USDA acreage forecasts set the stage for supplies to remain tight even through next year, Scoville added.


The nearby July future set a new all-time high of US$16.07 1/4.


"I did not see anything bullish in the USDA reports, but with a lot of gray areas when it comes to 2008 acreage, futures are poised to remain firmly underpinned," said Joe Victor, analyst with Allendale Inc. in McHenry Ill.


Meanwhile, end-user buying helped buoy prices, as they continue to take advantage of price setbacks to secure coverage in the market, as the tight fundamental makeup of the market remains intact, analysts said.


Technical buying was featured also, with advances accelerating once futures eclipsed overhead resistance levels. Spillover strength from inflationary markets, a lack of deliveries, and the vulnerability of crop yields to weather moving forward, kept risk premium in the market. The USDA estimated U.S. soybean planted area for 2008 at 74.5 million acres, up 17% from last year, but down from the March prospective plantings estimate of 74.793 million. Area for harvest, at 72.1 million acres, is up 15% from 2007.


Soybeans stored in all positions on June 1, 2008, totaled 676 million bushels, down 38% from June 1, 2007. Indicated disappearance for the March- May 2008 quarter totaled 758 million bushels, up 9% from the same period a year earlier.


In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.





Soy product futures ended higher, with soymeal futures catapulting to new contract highs in unison with soybeans. Soymeal remains underpinned by a strong underlying demand base, and with tight soybean supplies anticipated the market remains firmly underpinned, analysts said. Meal/oil spreading buoyed prices for most of the day as well.


Soyoil futures ended higher, staging a late-session bounce from early losses. The market was pressured by meal/oil spreading and end-of-the quarter position squaring for most of the day, but with supportive longer-range fundamental outlooks, the market found its footing down the stretch, a trader added.


December oil share ended at 45.12% and the November/December crush ended at 77 3/4 cents.


In soymeal trades, buyers and sellers were scattered among various commission houses.


In soyoil trades, buyers and sellers were scattered among various commission houses.


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