August 3, 2007

 

CBOT Soy Review on Thursday: Adds premium; midwest heat underpins

 

 

Chicago Board of Trade soybean futures ended higher Thursday, bouncing back from Wednesday's declines, as traders added risk premium amid eastern Midwest heat, analysts said.

 

August soybeans settled 5 1/4 cents higher at US$8.31, and November soybeans finished 5 3/4 cents higher at US$8.54 1/2. August soymeal settled US$2.60 higher at US$217.90 per short tonne. August soyoil ended 14 points higher at 37.43 cents a pound.

 

The market put in a little risk premium back in, as traders are on edge amid the potential stress hot, dry weather could poise for soybean crops in there critical yield development stage, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

The market is showing a little concern, as soybeans are a crop of August and with acres reduced this year any drop off in yields could take inventories down to uncomfortable levels, Hoops added.

 

Otherwise, activity was relatively quiet, with the absence of any aggressive selling allowing futures to push higher with little resistance. Technical buying aided the higher tonnee as well, as technical traders were seemingly encouraged by the market's ability hold underlying support levels, analysts said.

 

Nevertheless, weather remains the key driver of prices, with worries over moisture deficits across the crop belt keeping traders eyeing private weather forecasts for direction, a CBOT floor analyst said.

 

The DTN Meteorlogix forecast calls for a very stressful round of hot and dry weather in the Midwest, notably from Chicago east and southeast, during this late-week time frame. High temperatures from Chicago east will range from 90 to 95 Fahrenheit. Showers with up to one inch of rain will move across the western and northern Midwest during the next five days. The biggest help from the rain would be for soybean yields, due to soybeans just now moving into their pod-filling stage, Meteorlogix reports.

 

Meanwhile, the outlook through Sunday, Aug. 12, continues to feature a ridge west/trough east upper air pattern into early August. This implies a very warm to hot and mostly dry weather pattern across the central U.S. Crop stress looks to again be a feature across the central U.S. with this weather pattern. Forecast models aren't completely in line with this depiction; however, this general upper air pattern has been a persistent feature during the growing season, and difficult to dislodge, Meteorlogix reports.

 

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

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal rising in unison with soybeans in quiet trade. The absence of fresh fundamental news with no surprises seen in the weekly export sales report, kept soymeal in the role of a follower of soybeans, analysts said.

 

Soyoil futures ended mixed, with nearby contract up and deferred months drifting lower down the stretch on old/new crop spreading. Prices trended higher for most of the day, buoyed by spillover from soybeans, overnight gains in Malaysian palm oil and price gains in crude oil futures, analysts said.

 

August oil share ended at 46.20% and the August crush ended at 60 cents.

 

In soymeal trades, Rand Financial bought 600 December, and Tenco bought 500 September, with selling lightly scattered among various commission houses. Speculative fund buying was estimated at 3,000 lots.

 

In soyoil trades, Bunge Chicago bought 1,000 September and 400 December, and sold 300 December. Selling was scattered among various commission houses as well.