August 8, 2007

 

CBOT Soy Review on Tuesday: Rise on south. midwest dryness, technicals

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, posting double digit gains on dryness worries for the southern soybean belt and technical strength.

 

August soybeans settled 12 1/2 cents higher at US$8.38 1/2, and November soybeans finished 12 3/4 cents higher at US$8.62 3/4. August soymeal settled US$5.30 higher at US$226.00 per short tonne. August soyoil ended 18 points higher at 36.72 cents a pound.

 

Weather across the crop belt is imperfect, with rains improving yield prospects in the northern Midwest, while dryness in southern portions of the belt continue to promote a general reluctance on the funds part to liquidate length in the market, said John Kleist, analyst with Kleist Consulting.

 

Rains currently moving across the belt in areas of concern in the northern Midwest failed to push prices down to support levels, giving bullish traders confidence to keep prices holding within recent trading ranges, Kleist added.

 

Additional strength was generated from the market's ability to satisfy a technical objective of filling a chart gap left from Monday, analysts said. The uncertainty of the 2007 crop size continues to feed into the market's bullish mindset, with the underlying need to buy South American acres a supportive feature as well, traders said.

 

Talk of private forecasts calling for tighter soybean, soyoil and palm oil supplies added to the day's tonnee, with the uncertainty of yields a focal point heading toward Friday's crop production report.

 

The DTN Meteorlogix Weather forecast said stressful hot and dry weather Monday spread north from the southern Midwest into central areas as well. Extensive crop stress from heat index values above 100 Fahrenheit now cover the southern two-thirds of Illinois, central and southern Indiana, southern Ohio, central and southern Missouri and the Mississippi Delta. In this area, little rainfall and hot temperatures in the upper 90s to low 100s Fahrenheit during the next five to seven days will deplete soil moisture and increase stress on developing soybeans, Meteorlogix said.

 

Upper-atmosphere high pressure is currently centered over the lower Mississippi River valley. It is expected to drift a little to the west during the next five days. Next week, the upper-air high will move to the east and to the north. As a result, by next Friday, the ridge will be in a position over the eastern Plains or the western Midwest. This is a very-warm to hot-and-dry scenario during the six-to-10-day period. Crop stress will intensify as a result of this upper-air pattern, Meteorlogix reports.

 

In pit trades, speculative fund buying is estimated at 3,000 contracts. ADM Investor Services bought 300 November and Rand Financial bought 800 September.

 

 

SOY PRODUCTS

 

Soy product futures bounced higher, following in the foot steps of soybeans. Soymeal futures closely mimicked the price movements of soybeans, with technical momentum allowing futures to satisfy some near term upside objectives, analysts said.

 

Soyoil futures ended higher, but lagged behind the gains in the rest of the complex on meal/oil spreading and pressure from overnight declines in Malaysian palm oil and early declines in crude oil futures, analysts added.

 

August oil share ended at 44.82% and the August crush ended at 62 1/2 cents.

 

In soymeal trades, Tenco bought 800 December, JP Morgan bought 300 December, with speculative funds estimated buyers of 3,000 lots.

 

In soyoil trades, Fimat and Fortis each bought 300 December and Bunge Chicago bought 200 December. Tenco sold 300 December and UBS Securities sold 200 September. Speculative fund buying is estimated at 2,000 lots.