September 10, 2008

 

CBOT Soy Review on Tuesday: Rebounds on dollar, frost threats

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, bouncing back from early losses on weather concerns and a weaker U.S. dollar.

 

September soybeans settled 14 1/2 cents higher at US$12.09 and November soybeans ended 9 cents higher at US$12.01.

 

December soymeal settled US$5.70 higher at US$334.00 per short tonne. December soyoil finished 43 points lower at 48.81 cents per pound.

 

Midday weather forecasts pointing toward freezing temperatures moving into the northern Midwest by the end of next week coupled with another downturn in the U.S. dollar served as the catalyst to bounce prices into positive territory, said Bill Nelson, grains analyst with Wachovia Securities.

 

The market initially tumbled to five-month lows, succumbing to a broad-based flight from commodities by speculative investors, with weakness in crude oil and precious metals and economic jitters, pressuring prices, analysts said.

 

The absence of fresh supportive news, with soft export demand and beneficial Midwest weather conditions, added to the defensive tonnee. However, as the day unfolded, selling interest waned, with end-user buying, frost threats and weakness in the dollar uncovering short-covering interest, traders said.

 

Given oversold market conditions and uncertainty surrounding 2008 U.S. soybean yields, the market continues to find buyers once fund selling slows, analysts said. The trend is expected to continue into Friday's U.S. Department of Agriculture reports, as the market attempts to get a handle the size of the late-maturing 2008 U.S. crop, analysts added.

 

Looking ahead, USDA is scheduled to release its August crop report Friday 8:30 a.m. EDT (1230 GMT). The average of analysts estimates projects a crop size of 2.950 billion bushels with a yield of 40.2 bushels per acre. The averages ranged from 2.818 billion to 3.035 billion bushels for production and 38.4 to 41.4 for yields. The USDA in August pegged the crop at 2.973 billion bushels using a yield of 40.5 bushels an acre.

 

The DTN Meteorlogix forecast said rain in the Midwest will give a boost to filling crops. The western Midwest received rainfall from a quarter of an inch to 1 1/4 inches over the past 24 hours. That system moved east and dropped up to 1 1/4 inches in northern Illinois and southern Michigan. Lesser amounts, up to six tenths of an inch, have fallen in central Illinois, Indiana and Ohio, Meteorlogix reported.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil carving out new eight-month lows. Disinvestment in the commodity sector weighed on soyoil futures, with weakness in crude oil during the course of the day having a negative impact on the market, analysts said.

 

Soymeal futures ended higher, gaining product share on spreads. The fundamental picture remains unchanged, but with funds trimming length in soyoil more than soymeal, meal is benefitting from spread activity, a CBOT floor broker said.

 

December oil share ended at 42.22% and the November/December crush ended at 70 3/4 cents.

 

Speculative fund buying was estimated at 1,000 lots in soymeal, while speculative fund selling was measured at 1,000 lots in soyoil.