July 23, 2008
CBOT Soy Review on Tuesday: Higher; rebounds on speculative short covering
Chicago Board of Trade soybean futures climbed Tuesday, breaking a string of losses that spanned six consecutive sessions, on speculative short covering tied to oversold market conditions.
August soybeans settled 7 1/4 cents higher at US$14.16 3/4 and November soybeans ended 6 cents higher at US$14.09.
December soymeal settled 90 cents higher at US$366.20 per short tonne. December soyoil finished 25 points higher at 61.50 cents per pound.
The market was deeply oversold, and once speculative liquidation was exhausted, futures found support and bounced higher, analysts said.
Spillover weakness from crude oil futures, beneficial near-term crop weather, and technical weakness tied to futures penetrating underlying support weighed on prices initially, traders said.
The near-term damage is done, and with futures oversold the market was overdue for a minor technical correction, said a CBOT floor analyst. After dropping nearly US$2.00 a bushel in the past week, Tuesday's minor gains were seen as consolidative with the theme of market still bearish, he added.
Soybeans managed to bounce despite weakness in crude oil, evidence that speculative selling was exhausted, traders said. The market withstood the selling pressure seen in corn amid favorable Midwest weather, with traders saying corn is more sensitive to current weather due to pollination, while soybeans' critical weather month is August, traders added.
The DTN Meteorlogix weather forecast said scattered showers and thunderstorms will develop in the western Midwest on Wednesday and Thursday, continuing on Friday. Rainfall totals of .30-1.50 inches with locally heavier amounts are expected. Mostly dry conditions are on tap for Saturday through Monday. Temperatures will be near to below normal but near to above normal on Friday.
In the eastern Midwest, mostly dry conditions are expected Wednesday and Thursday. Episodes of scattered showers and thunderstorms are forecast for Friday and Saturday, with rainfall totals of .30-1.50 inches. Dry conditions are on tap for Sunday, with dry conditions or just a few light showers Monday, Meteorlogix forecasts.
In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.
SOY PRODUCTS
Soy product futures ended higher, recovering from early price weakness.
The markets kept pace with the bounce in soybeans. The entire soy complex was oversold, and once the selling was finally digested, futures grabbed some support and rose on speculative short covering and bargain hunting, analysts said.
December oil share ended at 45.64% and the November/December crush ended at 73 1/4 cents.
In soymeal trades, buyers and sellers were scattered among various commission, with speculative fund buying estimated at 1,000 lots.
In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund selling estimated at 1,000 lots.