January 14, 2006

 

CBOT Soy Review on Friday: Ends up; consolidating recent losses

 

 

Chicago Board of Trade soybean futures ended moderately higher Friday, scoring a modest bounce from heavy losses incurred during the past week, as the market consolidated heading into the extended holiday weekend.

 

CBOT markets will be closed Monday in observance of the Dr. Martin Luther King Jr. holiday.

 

March soybeans finished 4 1/2 cents higher at $5.76 1/2, March soymeal settled $2.70 higher at $181.70 a short tonne, while March soyoil ended 2 points lower at 21.67 cent a pound.

 

Pre-holiday weekend positioning managed to temper downside momentum as the market took a breather from its downward slide, analysts said. However, the stabilization was seen relative to exhausted selling as the market remains under the weight of bearish fundamentals, traders added.

 

Talk of good buying interest from China this week added to the strength of the market. Nevertheless, active contracts traded inside days on technical charts, with abundant supplies, improved weather conditions for crops in South America and the unwillingness of traders to establish fresh longs ahead of a long weekend limiting upside movement.

 

The higher theme was consistent for most of the day, with futures quickly climbing into positive territory after an early push lower failed to attract follow-through selling. Otherwise, activity was fairly quiet, with January soycomplex contracts expiring with little fanfare.

 

Meanwhile, the DTN Meteorlogix forecast said the past 24 hours brought on the development of thundershowers in southern Brazil soybean areas, and upper air features are now more favorable for the development of rainfall in Rio Grande do Sul and Parana provinces. Near- to above-normal temperatures and near- to below-normal rainfall in Rio Grande do Sul and Parana is expected during the next seven days.

 

In Argentina, showers and thunderstorms will continue in the corn and soybean areas through Monday. Rainfall totals will range from one-half to two inches, with locally heavier amounts. Temperatures will be near to below normal.

 

U.S. Department of Agriculture said private exporters reported the sale of 227,000 metric tonnes of U.S. soybeans to unknown destinations for delivery in the 2005-06 marketing year.

 

On tap for Tuesday, National Oilseed Processors Association will release its December crush report 7:30 CST. The average of analysts' estimates peg the crush at 145 million bushels and soyoil stocks at 1.746 billion pounds.

 

In pit trades, Term Commodities and Rand Financial each bought 300 March, J.P. Morgan and Kottke each bought 500 March and UBS Securities bought 800 March. Fimat and Refco Div of Man Financial each sold 700 march and Merrill Lynch sold 300 March. Commodity funds were net buyers on the day.

 

South American soybean futures ended higher. The March futures ended 5 cents higher at $6.07.

 

SOY PRODUCTS

 

Soymeal futures climbed in unison with soybeans, bringing an end to a string of losses in consecutive days that produced 1-month lows. The fundamentals of the market are unchanged, but oversold conditions encouraged consolidation heading into the long weekend, traders said.

 

Soyoil futures ended with light losses, stumbling on speculative selling, with building inventories applying fundamental pressure to prices. However, good underlying commercial buying continues to limit downside movement. March oil share dropped to 37.36%, and the March crush was at 61 1/2 cents.

 

In soymeal trades, ABN Amro bought 400 March and Fimat bought 1,200 March. Sellers were scattered among various firms. Fund buying was estimated between 1,000 and 2,000 lots.

 

In soyoil trades, Bunge Chicago was the primary buyer on the day, with Calyon Financial, J.P. Morgan and Refco Div. of Man Financial principle sellers. Fund selling was estimated near 2,000 lots, while commercial buying was pegged at over 1,000 lots.