July 4, 2008


CBOT Soy Review on Thursday: Climbs; notches new highs again



Chicago Board of Trade soybean futures ended higher Thursday, with the nearby July futures notching another record high on supply worries.


July soybeans settled 12 1/4 cents higher at US$16.58 and November soybeans ended 1 cent higher at US$16.29. The nearby July futures set a new all-time high on an intraday basis, climbing to US$16.63 on the Globex electronic system. Meanwhile, compared with last year, July soybeans are up 94.0%.


December soymeal settled US$1.50 higher at US$429.00 per short tonne. December soyoil finished 47 points lower at 69.45 cents per pound.


The market continues to feed off Monday's acreage and stocks reports, with smaller acreage and tight supplies encouraging traders to boost prices to levels that will ration demand, analysts said.


Rising concerns that new crop soybeans could have a smaller carryout than 2007-08's tight supply forecast is increasing interest in nearby futures, said Tim Hannagan, analyst with Alaron Trading in Chicago.


Weather concerns are raising fears of potential yield losses for new crop soybeans, and that is encouraging end users to cover as many needs with old crop futures amid the uncertainties of new crop potential, he added.


The market experienced a choppy theme for most of the day, but with forecasts for hotter, drier conditions next week and demand not showing any signs of slowing, sellers headed to the sidelines, traders said.


Nearby old crop futures are looking cheap to end users, as the uncertain availability of new crop production are attracting end users to buy nearby soybeans, Hannagan said. Current prices look like a fair value, as any disruption to production potential could push prices sharply higher in the next marketing year, he added.


The U.S. Department of Agriculture reported total weekly soybean export sales were a net 642,400 metric tonnes. 2007-08 crop year net sales totaled 465,900 tonnes for the week ended June 26. The sales were primarily for China with 200,600 metric tonnes. 2008-09 marketing year sales were 176,500 tonnes. Analysts had forecast sales between 325,000 and 525,000 metric tonnes.


Meanwhile, the DTN Meteorlogix weather forecast said during next week, the jet stream will track from west to east across the northern tier of states, occasionally dipping south into the upper Midwest. This track keeps extreme heat out of the Corn Belt.


Hot high pressure will be confined to the southwestern one-third of the U.S. As a result, threatening temperatures will not be an issue for corn and soybeans heading into the middle of July.


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





Soy product futures ended mixed, with nearby soymeal futures spiking to new highs. Strong underlying demand, amid supportive exports and favorable crush margins are keeping prices firmly underpinned, analysts said. Lingering concerns about tight soybean inventories added to the supportive theme, with near July futures spiking to a new all-time high for a spot month future, analysts added.


Soyoil futures ended lower, succumbing to pre-holiday weekend profit-taking pressure. Meal/oil spreading weighed on the market, offsetting the supportive outside influence of higher crude oil futures, analysts added.


December oil share ended at 44.57% and the November/December crush ended at 71 1/2 cents.


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


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