July 11, 2008

 

CBOT Soy Review on Thursday: Rallies; buoyed by tight supplies, crude surge

 

 

Chicago Board of Trade soybean futures ended higher Thursday, rallying on bullish supply outlooks and spillover support from a surge in crude oil futures.

 

July soybeans settled 31 1/2 cents higher at US$16.09 1/2 and November soybeans ended 30 cents higher at US$15.87.

 

December soymeal settled US$9.50 higher at US$424.00 per short tonne. December soyoil finished 65 points higher at 66.00 cents per pound.

 

The market is bracing for a tighter soybean balance sheet for both old- and new-crop marketing years, and that served as the catalyst to buoy prices throughout the day, said Vic Lespinasse, analyst with grainanalyst.com.

 

Speculative and commercial buying as well as soybean/corn spreading were featured during the session, traders said.

 

Overall, the soybean market is viewed as the most underpinned crop of the agricultural sector given the scarcity of old-crop supplies, analysts said. Selling pressure was limited on the bullish outlooks, with the trade expecting smaller ending stock forecasts in the U.S. Department of Agriculture's supply and demand reports Friday.

 

USDA is scheduled to release its July supply and demand report Friday at 8:30 a.m. EDT. The average of analysts' estimates for 2007-08 ending stocks is 123 million bushels, down slightly from the USDA's June estimate of 125 million, according to a Dow Jones Newswires survey of 11 analysts. 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 survey of 13 analysts. The range of analysts' estimates was 100 million to 175 million.

 

Adding to the bullish scenario were supportive outside market influences, with crude oil soaring by over US$5.00 a barrel, and gold futures rising over US$16.00 an ounce.

 

Meanwhile, favorable weather for developing Midwest crops provided light pressure to limit the upside push.

 

The DTN Meteorlogix weather forecast said the next couple days will bring a brief round of hot weather to the Midwest. Daytime temperatures will be in the 90s Fahrenheit over the western Midwest during Thursday and Friday, with the rest of the Midwest in the 80s. Temperatures by Sunday will cool into 70s Fahrenheit in the northern sector of the Midwest (Minnesota, Wisconsin and eastern Dakotas), with 80s elsewhere.

 

The prevailing weather pattern of this crop year, featuring generally cool and wet weather, is set to return to the Midwest during next week, Meteorlogix said. Shower activity will periodically move into the area, sometimes locally heavy and sometimes only light. Temperatures will be variable around normal values for the season. This trend will continue to be mostly favorable for crop progress, Meteorlogix 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 products ended higher, staging a solid bounce in unison with soybeans. The products are feeding off the bullish outlooks for tighter soybean supplies. A surge in crude oil futures and solid weekly export sales buoyed soyoil futures, while soymeal was underpinned by the rise in soybeans.

 

December oil share ended at 43.77% and the November/December crush ended at 71 3/4 cents.

 

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

 

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