Soybean futures at the Chicago Board of Trade closed firm on Monday due to worries about the US crop, which was under stress from extreme heat in the US Midwest, traders said. But the session was choppy and soybeans were pulled lower off-and-on amid the weakness in soymeal.
"I was surprised that we were down today ... going into the close. The heat that we are experiencing in here and the expected decline in ratings was going to keep us moderately higher on the day," said Dale Gustafson, analyst with Citigroup. August soybeans closed 3 cents higher at $5.79-1/2 per bushel and new-crop November was 1-3/4 higher at $5.99-3/4.
High temperatures reached the 100s (Fahrenheit) in several areas across the Midwest crop belt this weekend. More intense heat was expected through Wednesday west of the Mississippi River before cooler conditions moves into the western Midwest, a private forecaster said Monday.
But the eastern Midwest and Delta, a major soybean growing region, were not expected to get a break in the heat. That was a concern as August is the prime time for soybeans to make yields. The Agriculture Department late Monday reported that 53 percent of the US corn crop was rated good to excellent, down one percentage point from last week. Traders expected USDA to report a decline of 1 to 3 points.
Also supportive were lighter-than-expected deliveries at 326 lots on Monday, first notice day for August deliveries. Traders had expected 1,000 to 2,000 deliveries. The ABN Amro Inc house account put out 190 lots, which were met by scattered stopping. Soybeans were due for a lift from the technical side as last week's drop to a one-month low encouraged some short covering.
But weak demand for US soybeans because of ample old-crop supplies kept a lid on the rebound. USDA said Monday 7.9 million bushels of US soybeans were inspected for export last week, compared with estimates for 7 million to 12 million. Spot basis bids in the Midwest for soybeans were steady to firm early Monday, underpinned by light farmer sales, dealers said.
The products were mixed, with soymeal losing ground to soyoil. August soymeal closed $1.20 per ton lower at $162.60 per ton, with the deferreds down $1.40 to up 30 cents.
August soyoil settled 0.33 cent up at 26.72 cents per lb., with the back months up 0.20 to 0.31. Overhanging the soymeal market were bigger-than-expected soymeal deliveries issued on Monday, first notice day, by a commercial. The house account of ADM put out 735 lots, which were met by scattered stopping. Traders had expected deliveries of 500 to 600 lots.
Soyoil got a lift from some end-of-the-month plays with firms spreading positions. Tenco spread 2,000 August-October, traders said. In outright trade, funds bought 3,000 soyoil and sold 1,500 soymeal.
Soyoil remains supported by outlooks for increased biodiesel production globally and strong demand for vegetable oils in the cash markets. Indonesian palm oil prices extended their rally on Monday due to tight domestic supplies and strength in Malaysian palm oil futures, traders said.
Additionally, there were no deliveries Monday against the August contract. Traders had expected 1,500 to 2,000 deliveries. Volume was large across the complex. In soybeans, an estimated 102,552 futures and 12,578 options traded. Soymeal volume was pegged at 44,540 futures and 1,859 options. Estimated soyoil trade was 56,419 futures and 2,573 options.
Trade data from the Commodity Futures Trading Commission showed that large speculators expanded their net short positions in CBOT soybean and soymeal futures while reducing their net longs in soybean oil during the week ended July 25.