September 13, 2008
CBOT Soy Review on Friday: Spike on tight supplies, USDA data, dollar
Chicago Board of Trade soybean futures spiked higher Friday, with tight supplies, supportive yield and production estimates and a weaker U.S. dollar buoying the market.
September soybeans settled US$2.74 higher at US$14.90 and November soybeans ended 26 cents higher at US$12.02.
December soymeal settled US$4.30 higher at US$334.50 per short tonne. December soyoil finished 37 points higher at 47.99 cents per pound.
Weakness in the U.S. dollar served as an outside spark for prices, with the U.S. Department of Agriculture's lower yield and production forecasts providing fresh fundamental support, analysts said.
The USDA data gave the market a fundamental boost to take some attention off outside markets, with very tight nearby supplies allowing futures to stand on their own, despite a midday break in crude oil futures, analysts added.
Firm cash basis levels, as the cash pipeline scrapes the bottom of the barrel for supplies, generated further support to lift prices, traders said.
The nearby September soybean contract leaped over US$2.00 bushel, spiking on last minute positioning and short covering ahead of the contract's expiration, traders said.
"The bean harvest in the Delta is late, very few beans are in processor hands, there are not many beans in deliverable positions, and that has forced shorts to cover positions," said Vic Lespinasse, analyst with Grainanalyst.com.
Looking back at records to 1972, a bigger one-day price move in a soybean contract couldn't be found, according CME Group spokesperson Mary Haffenberg.
Meanwhile, traders are expected to keep a close eye on outside markets, and the supply situation, with the uncertainty of 2008 yields opening the door for future yield reductions by the USDA.
On tap for Monday, the National Oilseed Processors Association's monthly soybean crush report for August is scheduled to be released Monday at 8:30 a.m. EDT (1230 GMT). The crush is expected to decline to 132.125 million bushels from the previous report, owing to tightness of available supplies, according to a survey of industry analysts.
The DTN Meteorlogix forecast calls for additional rainfall of more than an inch in an area focusing on the corridor from Interstate 70 to Interstate 80. This moisture is ill-timed due to complications for crops trying to mature and ripen, as well as creating muddy field conditions. Some disease loss in corn and soybeans is also possible with wet and cool conditions.
In pit trades, speculative fund buying is estimated at 3,000 lots.
SOY PRODUCTS
Soy product futures ended higher, propelling in step with soybeans. Soyoil futures managed to maintain its gains despite a retreat in crude oil futures, with the absence of an increase in world vegoil stocks and a tighter domestic balance sheet opening the door for advances, analysts said.
Soymeal futures bounced as well, fueled by firm cash basis levels amid very tight nearby supplies, a CBOT floor analyst said.
December oil share ended at 41.77% and the November/December crush ended at 61 3/4 cents.
Speculative fund buying was estimated at 1,000 lots in soymeal, and 2,000 lots in soyoil.