October 28, 2008
CBOT Soy Review on Monday: Rally boosted by suprising export strength
Chicago Board of Trade soybean futures popped up by nearly 30 cents in Monday's trade, as bullish export inspections supported ideas of strong demand.
The November soybean contract ended 29 1/4 cents higher at US$8.93 and briefly touched US$9 after climbing steadily from the day's low of US$8.70. January soybeans added 30 1/2 cents to close at US$8.97 1/2, after climbing as high as US$9.08.
Soybean export inspections soared, topping even the highest analyst guesses when the U.S. Department of Agriculture Monday released its report for the week ending Oct. 23. Inspections hit 40.963 million bushels, up nearly 60% over the week-earlier total. Analysts estimated inspections to range from 28-40 million bushels.
"There's better demand than we anticipated right now," a CBOT floor trader says. "There's just no farmer movement. The pipeline's tight."
Traders are watching the November-January spread, which could flip to the inverse if no new supplies are added to commercial inventories, the trader said.
The spread tightened from a 17-cent range to as little as 2 cents but closed the day with an 8-cent gap.
The Commitment of Traders Report released by the Commodity Futures Trading Commission Friday revealed "hedge funds turned to a net short position in soybeans for the first time in two years," noted Bryce Knorr, Farm Futures senior editor.
The position change reflected a drop in open interest of almost 19,000 contracts, noted on Friday's expiration of November options, "which was otherwise uneventful," Knorr said.
The USDA is scheduled to release its weekly crop progress report at 4 p.m. EDT. Analysts expect soybean harvest to range from 70-80% complete, after hitting 67% in last weeks' report.
On Monday, Funds bought an estimated 5,000 CBOT soybean contracts.
Soy-product futures jumped Monday, following the soybean rally.
Traditional speculative funds held net short positions of 23,113 in CBOT soyoil futures and options contracts, according to the CFTC's weekly Commitment of Traders report released Monday. The funds were net long 7,984 combined CBOT soymeal futures and options positions.
December oil share ended at 36.47% and the November/December crush ended at 63 3/4 cents.
Funds bought an estimated at 1,000 lots in soymeal and soyoil, respectively.