August 14, 2008


CBOT Soy Review on Wednesday: Limit up; fundamentals, technical correction



Chicago Board of Trade soybean futures soared Wednesday, with active contracts settling at their exchange-imposed 70-cent upper daily trading limits on supportive fundamentals and technical buying.


August soybeans settled 50 cents higher at US$12.70 and November soybeans ended 70 cents higher at US$12.84.


December soymeal settled US$20.00 higher at US$352.00 per short tonne. December soyoil finished 250 points higher at 53.28 cents per pound.


Speculative buying and short covering was featured, as buyers returned to the market with more confidence that a near-term bottom was in place, said Dan Basse, president AgResource Company in Chicago.


The market still has a tight stock situation, and Tuesday's U.S. Department of Agriculture crop report put market bears on warning that any weather problem for crops in the U.S. or South America could spike prices back to their highs, he added.


Outside market influences played a key role in extending the corrective bounce, with sharply higher crude oil and precious metal prices coupled with a weaker U.S. dollar index attracting some inflationary buying, analysts added.


Futures experienced a strong technical correction, rebounding from steep losses of the past month particularly after the market had priced in a bigger crop than the USDA estimated Tuesday, said Mario Balletto, analyst with Citi in Chicago.


Due to the lack of maturity in the 2008 soy crop coupled with tight soybean supplies the market is expected to remain supported, as the crop will need good finishing weather to exceed current USDA forecasts, analysts added.


Traders said November soybeans were synthetically trading in the options pit in a range of US$12.98 to US$13.00. The pool of orders on the electronic screen to buy the November contract at the close stood at 15,000 lots.


CBOT soybean, soyoil and soymeal futures will trade with expanded daily trading limits Thursday by virtue of settling limit up Wednesday. Soybeans will trade with US$1.05-a-bushel limits, soyoil with limits of 350 points and soymeal will trade with US$30.00-per-short-tonne limits, according to the CME Group Web site.


In pit trades, speculative fund buying was estimated at 5,000 lots.


On tap for Thursday, USDA at 8:30 a.m. EDT will issue its weekly export sales report. Soybean sales are estimated at 200,000 to 600,000 tonnes. Soymeal sales are projected in a range of 50,000 to 200,000 metric tonnes, with soyoil sales expected in a zero to 15,000-tonne range.


The National Oilseed Processors Association is scheduled to release its monthly soybean crush report for July at 8:30 a.m. EDT (1230 GMT). The crush is expected to increase to 138.5 million bushels from the previous report due to one more crushing day in July and crushers returning from downtime in June, according to a survey of industry analysts. Estimates for the report ranged from as low as 135 million bushels to as high as 142.2 million bushels.





Soy-product futures soared in step with soybeans, catapulting to their exchange-imposed daily trading limits on corrective technical buying and uncertain supply outlooks for soybeans.


Traders said December soymeal was synthetically trading in the options pit in a range of US$354.50 to US$356.50. December soyoil was synthetically trading in the options pit in a range of 53.28 to 53.50, traders said.


December oil share ended at 43.08% and the November/December crush ended at 76 1/2 cents.


Speculative fund buying was estimated at 3,000 lots in soymeal and 4,000 lots in soyoil.


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