September 9, 2008
CBOT Soy Review on Monday: Market up on speculative buying, crop concerns
Chicago Board of Trade soybean futures ended higher Monday, bouncing on technically inspired speculative buying and continued crop concerns.
September soybeans settled 14 1/2 cents higher at US$11.94 1/2 and November soybeans ended 15 cents higher at US$11.92.
December soybean meal settled US$1.30 higher at US$328.30 per short tonne. December soybean oil finished 35 points higher at 49.24 cents per pound.
The market was perceived as oversold following last week's price declines, and with uncertainty surrounding the 2008 late-maturing soybean crop, buyers gained some confidence in the absence of aggressive fund selling, analysts said.
The market got a boost from the U.S. government taking over mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE), which was perceived as providing some stability to an unhealthy economic environment, said Tim Hannagan, grains analyst with Alaron Trading. The move gave buyers some confidence that last week's lows should hold, Hannagan added.
However, upside movement was capped by a firmer U.S. dollar, flat crude oil and retreating precious metals prices. A stronger dollar is bearish for commodities as most raw materials are dollar-denominated, making it more expensive for foreign buyers to import.
Meanwhile, friendly crop production outlooks for later in the week added support, while beneficial rain for late-planted crops in the Midwest applied some fundamental pressure. Reports of some private forecasters adding frost threats into long-range forecasts also underpinned prices, analyst said.
Rainfall of at least one-half inch is moving through the western Midwest Monday and promises to extend into the eastern Midwest Tuesday. The DTN Meteorlogix forecast calls for rainfall to total more than an inch in the western Midwest and as much as three-quarters of an inch in the eastern Midwest. This rain will benefit late-season crops, notably soybeans, Meteorlogix said.
In the Midwest, Tuesday morning temperatures may see one or two cities dip into the upper 30s Fahrenheit. However, there is no significant risk of a season-ending freeze for the Midwest during the next 10 days, Meteorlogix added.
The U.S. Department of Agriculture is scheduled to release its weekly crop progress report at 4 p.m. EDT, with analysts anticipating crop ratings to hold steady or decline by 2 percentage points.
In pit trades, speculative fund buying was estimated at 3,000 contracts.
Soy product futures ended mixed, with most contracts bouncing in unison with soybeans. Soyoil futures rose amid technical buying, with overselling spilling over from soybeans serving as a catalyst despite early pressure from declines in crude-oil futures, analysts said.
Soymeal futures ended narrowly mixed, losing product share to soyoil on spreads. The spreading of the products weighed on meal, with soft export demand helping keep a lid on the markets' upside potential, analysts added.
December oil share ended at 42.85%, and the November/December crush ended at 70 cents.
Speculative fund buying was estimated at 2,000 lots in soyoil, and 1,000 lots in soymeal.