July 20, 2007

 

CBOT Soy Review on Thursday: Higher; climbs on midwest weather concerns

 

 

Chicago Board of Trade soybean futures ended higher Thursday, rebounding from early losses, as forecasts for hot, dry Midwest weather next week underpinned prices.

 

August soybeans settled 4 3/4 cents higher at US$8.56, and November soybeans finished 5 1/2 cents higher at US$8.82. August soymeal settled US$0.90 higher at US$227.50 per short tonne. August soyoil ended 13 points higher at 37.63 cents a pound.

 

Despite extracting a good chunk of weather premium out the market this week, traders remain reluctant to break prices too far, with soybeans still weeks away from making it through their critical growth stage, said John Kleist, a Chicago grain analyst.

 

Forecasters are calling for very hot, dry conditions to return to the Midwest crop belt next week, and that is providing enough market uncertainty to underpin prices, analysts said.

 

Technical buying aided the market's gains as well, with the ability of active contracts to hold above major moving average support attracting speculative buyers, analysts added.

 

There is enough fundamental uncertainty with weather and smaller acreage to hold prices above key support levels, Kleist said. The most active November futures have held above their 45- and 50-day moving averages for three days in a row, levels seen as speculative fund defense areas, Kleist said.

 

Futures initially stumbled lower, succumbing to fund selling amid beneficial overnight rains that spanned a greater area of the Midwest than previously forecast, traders said. However, with key areas in the northwest Midwest continuing to miss the rains and the potential for a heat dome to return to the Midwest next week, futures found their footing down the stretch, traders said.

 

The DTN Meteorlogix forecast said the rainfall outlook for the central U.S. through July 29 is not promising - near to below normal, with the best chance for rain in the Ohio Valley and Missouri Bootheel.

 

The main jet stream will locate into southern Canada, thus keeping storm systems well out of the central U.S. crop areas. This jet stream pattern will also allow temperatures to climb into normal to above-normal categories. Driest areas of the Midwest, in the northwest, west, and northeast - Great Lakes area - have the most stressful outlook over this time frame, Meteorlogix reported.

 

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

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, recovering from early weakness on spillover support from a rebound in soybean futures, analysts said. Soymeal price movement continues to mirror soybeans, with technical support tied to active contracts' ability to climb back above major moving average support attracting buyers, analysts said.

 

Soyoil futures ended as well, continuing to hover near contract highs, with spillover from soybeans, higher crude oil prices and fundamental strength from world vegoil demand remaining underpinning features, analysts said. Commercial buying was featured during the session, traders said.

 

August oil share ended at 45.27% and the August crush ended at 58 1/2 cents.

 

In soymeal trades, Fortis bought 400 March, and Man Financial bought 600 December. RJ O'Brien sold 500 December.

 

In soyoil trades, Bunge Chicago bought 400 December, and Fimat bought 600 December. Sellers were lightly scattered among various commission houses. Commercial firms were estimated buyers of 2,000 lots.