January 9, 2008

 

CBOT Soy Review on Tuesday: Rises on fund buying, outside markets

 

 

Chicago Board of Trade soybean futures finished solidly higher Tuesday, with the July contract rallying to a new all-time high amid commodity fund buying and spillover support from firmer outside markets, traders and analysts said.

 

CBOT March soyoil also set a new all-time high.

 

March soybeans closed up 17 1/4 cents at US$12.67 per bushel. March soymeal climbed US$7.70 to US$352.20 per short tonne, and March soyoil rose 25 points to 51 cents per pound.

 

July soybeans climbed to a new all-time high of US$13.06 in electronic trading, topping the previous high of US$13.01 1/2. The contract climbed as high as US$13.05 in open auction trading and settled up 18 3/4 cents at US$12.95.

 

Commodity funds bought an estimated 7,000 soybean contracts. In pit trades, RJ O'Brien bought 1,000 March, while MF Global bought 500 March. Fortis bought 500 November, and UBS bought 300 March. Fimat sold 300 March.

 

Along with the fund buying, spillover support from stronger gold and crude oil futures boosted soybeans, traders said. CBOT corn also was firmer as the market climbed amid heavy fund buying.

 

"You've got a pretty large amount of investor capital flowing into the beans and the corn," said John Kleist, analyst for Kleist Ag Consulting.

 

A sharp increase in the U.S. government's price forecast for crude oil added to the "bullish psychology" of the soybean market, Kleist said. Benchmark West Texas Intermediate crude is seen averaging US$92.33 a barrel in the first quarter in an estimate by the U.S. Energy Information Administration. The statistics and analysis wing of the U.S. Department of Energy revised its previous first-quarter forecast upward by 6.1%, from US$87 a barrel.

 

"That possibly could limit any severe collapses in the beans for awhile," Kleist said about the lofty new estimate.

 

There was some bullish talk about forecasts that showed a drier bias for Argentina, but an analyst said the rally in soybeans was mostly technical. DTN Meteorlogix reported less said less rain is expected in Argentina's primary crop areas Thursday, with amounts reduced to 1 inch from up to 1.5 inches.

 

"More rain and cooler temperatures are needed to support pollinating corn and developing soybeans," Meteorlogix said.

 

In other news, Brazil's new soy crop estimate remains relatively stable from previous estimates and should come in at 58.2 million metric tonnes, the National Commodity Supply Corp., or Conab, said. Brazil starts to harvest soybeans in March.

 

Conab released its fourth 2007-08 soy crop estimate on Tuesday, together with the agricultural statistics arm of the Brazilian Census Bureau, IBGE. In November, IBGE put the crop at 58.19 million tonnes and dropped it slightly in this estimate to 58.18 million tonnes.

 

 

Soy Products

 

CBOT soy product futures closed higher on spillover support from rallies in soybeans and outside markets, traders said. CBOT March soyoil set a new all-time high of 51.64 cents per pound.

 

The products rose amid borrowed strength from crude oil and gold, they said. Commodity funds bought an estimated 5,000 soyoil contracts and 2,000 soymeal contracts.

 

In soymeal pit trades, RJ O'Brien and JP Morgan each bought 500 March. In soyoil pit trades, RJ O'Brien bought 600 March, and Tenco bought 700 December and 300 March. Bunge sold 600 March soyoil.