July 2, 2008

 

CBOT Soy Review on Tuesday: Extends rally; new highs on supply concerns

 

 

Chicago Board of Trade soybean futures carved out new all-time highs again Tuesday, soaring on continued worries of tightening supplies and bullish inflationary signals, analysts said.

 

July soybeans settled 23 cents higher at US$16.28 and November soybeans ended 34 cents higher at US$16.08. December soymeal settled US$7.20 higher at US$419.20 per short tonne. December soyoil finished 63 points higher at 68.38 cents per pound.

 

The tight supply scenario that is seen carrying out through the 2008-09 marketing year, coupled with rallies in crude oil and precious metals prices served as the catalyst to extend the markets rally, said Greg Wagner, analyst with AgResource Company in Chicago.

 

The inflationary aspects of the market added to the bullish twist on prices, but fundamentals remained the key driver buoying futures to record highs, analysts said.

 

The tight supply scenario is placing increasing pressure on new crop production, but with the 2008 U.S. soybean crop off to a less than stellar start to the growing season, analysts worry that 2009 ending stocks could be tighter than 2008, analysts added.

 

The market is effectively attempting to ration demand, rally prices to levels that will cool export or domestic demand in an effort to limit supply risks, Wagner added.

 

U.S. Department of Agriculture acreage data released Monday implied 2008-09 soybean production potential of 3 billion bushels or less, and that is less than USDA's forecasted demand of over 3.06 billion, and with no relief provided from tight anticipated carrying supplies, the market is rallying accordingly, said Bill Nelson, grains analyst with Wachovia Securities in St Louis, MO.

 

Monday's U.S. Department of Agriculture reports continue to serve as confirmation that the long-range outlook for soybeans is bullish, and traders remain reluctant to pressure the market amid worries of deepening supply concerns moving forward, analysts added.

 

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 ended higher in step with soybeans, propelled by speculative buying attributed to a bullish fundamental outlook for the soy complex, analysts said. Soymeal futures rallied to new contract highs, fueled by a strong underlying demand base and spillover strength from soybeans, traders said.

 

Soyoil futures climbed to post two-week highs, energized by tight supply concerns for soybeans and supportive inflationary based buying, analysts added.

 

December oil share ended at 44.92% and the November/December crush ended at 64 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, speculative fund buying was estimated at 1,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, speculative fund buying was estimated at 2,000 lots.

 

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