August 19, 2008


CBOT Soy Review on Monday: Rally sustained on fundamental strength



Chicago Board of Trade soybean futures settled at or near their exchange-imposed, 70-cent maximum trading limits Monday, as traders looked to dry weather and variable crop conditions.


September soybeans settled 67 1/2 cents higher at US$12.79, and November soybeans ended limit-up, 70 cents higher, at US$12.89.


December soymeal settled US$18 higher at US$350.70 per short tonne. December soyoil finished 250 points higher at 53.33 cents per pound.


"It was a pretty volatile day," a CBOT floor trader said.


Monday's strong soybean market was in part a correction to Friday's short-covering slide, but traders also found support in new rallies by restive Argentine farmers, the appearance of sudden death syndrome in Illinois soybean, extended dryness in the corn belt and reports of widely varying crop conditions from participants on the Pro Farmer Midwest Crop Tour.


The dryness in the corn belt "certainly is bullish for soybean prices, said Brian Hoops, president of Midwest Market Solutions. "That takes a lot of the pod-filling away from the beans and takes some of the soyoil out of the beans."


At various times throughout the day, all nearby soybean contracts through July touched limit-up territory, but limits on futures trading did not inspire any synthetic trading in the options pit, a CBOT floor trader said.


Funds bought an estimated 5,000 contracts.


"Much of the soybean belt in the Midwest has begun to turn drier recently, and this is beginning to stress pod development for more than 1/2 of the belt," according to a Cropcast forecast.


"The combination of a rain system late this week and the remnants of Tropical Storm Fay will have the best chance of bringing improvement into portions of Ohio and Indiana," the private weather firm said.


But the forecast adds that "much of the northern & western Midwest will still likely see either only light rainfall or no rainfall, allowing stress to persist in at least a third of the belt."





Soy-product futures jumped Friday, following the soybean rally.


Both soymeal and soyoil came close to or hit their daily exchange-imposed maximum trading limits as traders found bullish inspiration in dry weather, disease and delayed crop development.


December oil share ended at 43.19% and the November/December crush ended at 69 1/4 cents.


Speculative fund buying was estimated at 2,000 lots in soymeal, and 3,000 lots in soyoil.


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