January 13, 2007
CBOT Soy Review on Friday: Soars to new highs on corn influence
Chicago Board of Trade soybean futures ended sharply higher Friday, surging to new contract highs, bolstered by speculative buys associated with spillover strength from corn and supportive crop data from the U.S. Department of Agriculture.
March soybeans ended 42 1/4 cents higher at US$7.16 1/2. March soymeal settled US$15.20 higher at US$209.60 per short tonne, while March soyoil ended 79 points higher at 29.15 cents a pound.
The influence of limit-up corn futures served as the driver of the markets upward charge, as the need for soybeans to follow corn in an effort to battle for 2007 acres uncovered a plethora of speculative buying, analysts said.
The USDAs unexpected cut in U.S. soybean production was friendly to the bullish cause, but perceptions soybeans somehow have to follow along with corn proved to be a key factor in the markets overall bullish theme, said Dan Basse, president of AgResource Co. in Chicago.
Corn played a key role in the movement of soybeans, as the inability of traders to buy corn amid its locked limit status throughout the day attracted panic buying in soybeans and wheat, as traders looked for areas to buy, said a CBOT floor analyst.
The soybean crop report was friendly, but not to the magnitude of Fridays price gains, and with another large crop expected from the Southern Hemisphere, this illustrates how soybeans were dependent on corn for its strength, said John Kleist of Top Third Ag Marketing in Chicago.
USDA reported U.S. soybean production for the 2006-07 marketing year at a record 3.188 billion bushels. The figure is down from the 3.204 billion forecast in the USDAs November report and below the average of analysts estimates at 3.235 billion. USDA reported soybean stocks as of Dec. 1 at 2.697 billion bushels, well below the average trade estimate of 2.736 billion.
CBOT markets will be closed Monday in observance of the Martin Luther King Jr. Holiday.
On tap for Tuesday, the National Oilseed Processors Association is scheduled to release its December soybean crush report at 8:30 a.m. EST. Analysts surveyed by Dow Jones Newswires peg the crush at 148.7 million bushels. Estimates for the report ranged from as low as 145.4 million bushels to as high as 150.5 million bushels. NOPA soyoil stocks in December are expected to increase by 41 million pounds to 2.735 billion pounds from the 2.694 billion reported in November.
In pit trades, ADM Investor Services bought 1,200 March, Man Financial and RJ OBrien each bought 1,500 March, Calyon Financial bought 1,000 March. UBS Securities sold 1,500 March and Rand Financial sold 1,000 March. Speculative funds were estimated buyers of between 10,000 and 12,000 contracts.
SOY PRODUCTS
Soy product futures rallied sharply, in tune with the bullish theme filtering through soybeans.
Soymeal futures were upside leader of the products, bolstered by speculative buying. The market rallied to new contract highs, with nearby futures soaring to their highest levels since August 2005 on continuation charts. Futures pushed above the psychological US$200.00-per-short tonne level for the first time since November on continuation charts.
Speculative buying proved to be the key driver of prices, with soaring soybean futures providing strength to the products, analysts said.
Soyoil futures rallied to 1 1/2-week highs, in step with the rest of the complex, but soymeal/soyoil spreading did manage to trim oil share, traders said.
March oil share ended at 41.02% and the March crush ended at 65 1/4 cents.
In soymeal trades, Iowa Grain, Man Financial and Rosenthal each bought 1,000 March, with Bunge Chicago and Calyon Financial each buyers of 500 March. Fortis sold 1,000 March, Bunge Chicago sold 500 March and Rand Financial sold 400 March. Speculative funds were estimated buyers of 3,000 contracts.
In soyoil trades, speculative fund buying was estimated at 5,000 contracts. UBS Securities and Calyon Financial each bought 500 march, with Fimat buying 400 March.
