July 10, 2008

 

CBOT Soy Review on Wednesday: Climbs on outlook for tightening supplies

 

 

Chicago Board of Trade soybean futures climbed Wednesday on end user demand and expectations for a tightening of U.S. ending stocks, analysts said.

 

Nearby July soybeans jumped 17 cents to US$15.78 per bushel, while November soybeans surged 27 1/2 cents to US$15.57. December soymeal soared US$14.70 to US$414.50 per short tonne, and December soyoil rose 39 points to 65.35 cents per pound.

 

Worries about shrinking U.S. soybean stocks supported the market ahead of the release of the U.S. Department of Agriculture's July supply and demand report, due out at 8:30 a.m. EDT Friday. The government is expected to cut its forecast for 2008-09 soy carryout, and to either trim its 2007-08 carryout forecast or leave it unchanged at a historically tight level.

 

The average of analysts' estimates for 2008-09 soybean carryout is 139 million bushels, down from the USDA's June estimate of 175 million, according to a Dow Jones Newswires survey of 13 analysts. The average of analysts' estimates for 2007-08 ending stocks is 123 million bushels, compared to 125 million in June, although six of 11 analysts polled said they expected no change in old-crop stocks.

 

"We have this report on Friday," said Don Roose, president of U.S. Commodities. "We're just razor tight. End users want to be covered before the report."

 

More positioning is expected Thursday, with some long liquidation likely before the close of trading as market participants will want to be even heading into the report, said Tim Hannagan, analyst for Alaron. Traders are "focused now on one thing only, and that is that crop report Friday," he said.

 

There was some chatter in the market about the possibility for another round of farmers' strikes in Argentina, traders said. Argentine farm groups earlier this year launched an extended strike and prevented agricultural products from getting to port in a protest over a controversial export tax.

 

The strike was bullish for CBOT soybeans because it sent demand to the U.S. from South America, which provided an unexpected boost to the U.S. export business.

 

The USDA on Thursday will issue its weekly export sales report. Soybean export sales for the week ended July 3 are expected to be 250,000 to 600,000 metric tonnes, analysts said.

 

Commodity funds bought an estimated 3,000 contracts.

 

 

Soy Products

 

CBOT soy product futures closed higher amid the worries about dwindling U.S. soy supplies, analysts said. Technical buying helped boost the soy complex after recent setbacks in the markets, a trader said.

 

Weekly soymeal export sales are seen at 50,000 to 150,000 tonnes, while soyoil sales are seen at 5,000 to 15,000 tonnes, analysts said. Commodity funds bought an estimated 3,000 soymeal contracts and 1,000 soyoil contracts.