September 20, 2008

 

CBOT Soy Review on Friday: Jumps on outside markets; soyoil rises limit

 

 

Short-covering and spillover support from outside markets shoved Chicago Board of Trade soybean futures higher Friday, while soyoil futures surged the daily, exchange-imposed limit.

 

November soybeans climbed 27 1/2 cents to close at US$11.43 1/2 per bushel, down 58 1/2 cents on the week.

 

December soyoil closed limit up, 250 points higher, at 47.40 cents per pound. December soyoil finished up US$1.70 at US$315.50 per short tonne.

 

Traders covered short, or sold, positions ahead of the weekend after a week of volatile trading, including a sell-off Thursday, an analyst said. The U.S. government's plan to take bad assets off financial companies' balance sheets added support, as jitters about the health of the financial sector weighed on commodities earlier this week, he said. Stocks rose on news of the government's plan.

 

Gains in crude were another supportive factor. Crude oil is linked to soybeans because funds often trade commodities in a basket and because biodiesel is made from soyoil.

 

The soy complex will continue to find direction from outside influences next week if outside markets remain volatile, said Tomm Pfitzenmaier, senior analyst for Summit Commodity Brokerage. Fundamentals have been on the back burner this week amid the turmoil in financial markets.

 

"If things stabilize there, I think we'll switch right back to the fundamentals," Pfitzenmaier said. "It seems to me (that) all week long the beans have followed the outside markets more than anything has."

 

The weather outlook for soybeans looks bearish, with no imminent threats of frost in the Midwest, Pfitzenmaier said. The market had been worried about an early frost because the development of the crop was slowed by late planting and cool, wet weather this spring.

 

Despite forecasts for cooler temperatures in early October, "the first frost or freeze is not foreseen," T-Storm Weather said. Temperatures will average near to above-normal in the corn belt through next weekend, the private weather firm said.

 

 

Soy Products

 

CBOT soy product futures closed higher, with soyoil surging the exchange-imposed limit of 250 points. The daily limit for soyoil on Monday will expand to 350 points because of the limit-up close, according to the CME Group's Web site. The CBOT is a unit of the CME.

 

Spillover support from gains in crude oil and short-covering pulled the soy complex higher, an analyst said. Commodity funds bought an estimated 2,000 soyoil contracts and 1,000 soymeal contracts.