October 9, 2008

 

CBOT Soy Review on Wednesday: Rallies on short covering, firm cash markets

 

 

Soybean futures on the Chicago Board of Trade climbed Wednesday, rallying on speculative short-covering, and buying associated with firm cash prices, analysts said.

 

November soybeans ended 38 cents higher at US$9.64.

 

December soymeal settled US$12.00 higher at US$268.50 per short tonne. December soyoil finished 5 points lower at 39.77 cents per pound.

 

Oversold market conditions following a recent drop in prices to one-year lows opened the door for the bounce, analysts said. Fundamental support from tight nearby supplies amid limited farmer selling in the face of harvest delays and falling prices aided the market's recovery as well, traders added.

 

"Up and down movement in outside equity markets amid the lingering global economic crisis did not provide the usual bearish grip on the market, allowing soybean futures to stand on its own feet for a change," a CBOT floor analyst said.

 

Futures showed some signs of stability, with the exhaustion of speculative sales, while garnering additional support from weakness in the U.S. dollar. Nevertheless, firm cash prices at the U.S. Gulf of Mexico and farmers remaining tight fisted with nearby supplies served to cool selling interest.

 

The DTN Meteorlogix forecast said the Midwest is drying out and warming up, clearing the way for harvest to proceed. The last of a recent rain system is moving out of the eastern Midwest into the Southeast. The next several days are going to be near ideal for harvest. Temperatures will reach into the 70s across much of the Midwest by Friday. By Saturday, temps in the southern and central Midwest will hit the 80s.

 

On tap for Thursday, U.S. Department of Agriculture at 8:30 a.m. EDT Thursday will issue its weekly export-sales report. Soybean sales are estimated at 300,000 to 700,000 tonnes. Soymeal sales are projected in a range of 50,000 to 150,000 metric tonnes, with soyoil sales expected in a zero- to 10,000-tonne range.

 

The USDA is scheduled to release its October crop report Friday at 8:30 a.m. EDT (1230 GMT). The average of analysts' estimates in a Dow Jones Newswires survey projects a crop size of 2.920 billion bushels with a yield of 39.9 bushels per acre. The averages ranged from 2.847 billion to 3.001 billion bushels for production and 38.9 to 40.9 bushels an acre for yields. In September, USDA projected a crop size of 2.934 billion bushels using a yield of 40.0 bushels an acre.

 

The average of analysts' estimates projects ending stocks at 188 million bushels. The averages ranged from 137 million to 258 million bushels. In September, USDA projected the 2008-09 carryout at 135 million. In pit trades, speculative fund buying was estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal rallying on the heels of gains in soybeans. Technically inspired short covering was the featured attraction, traders said. Soyoil futures ended lower, succumbing to spillover pressure from crude oil and adjustments in the meal/oil spread, analysts said. The market managed to trim its losses once crude oil cut its declines, but was unable to stem the tide of lost product share to soymeal.

 

December oil share ended at 42.55% and the November/December crush ended at 64 3/4 cents.

 

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