January 18, 2007

 

CBOT Soy Review on Wednesday: Sets new highs on speculative, technical buys

 

 

Chicago Board of Trade soybean futures ended sharply higher Wednesday, climbing to new contract highs on speculative buying amid technical strength and spillover support from corn futures.

 

March soybeans ended 13 1/2 cents higher at US$7.22. March soymeal settled US$5.70 higher at US$213.80 per short tonne, while March soyoil ended 18 points higher at 28.97 cents a pound.

 

Speculative buying returned to bolster upside movement after taking a respite Tuesday, said Bill Nelson, associate vice president A.G. Edwards and Sons in St. Louis.

 

The market was influenced by price strength in corn, as long-term realizations that soybean acres lost to corn will provide downward pressure on production, Nelson added.

 

Meanwhile, technical factors played a key role as accelerated buying propelled futures to new contract highs, said a CBOT floor analyst. Buyers have gained confidence amid ideas pressure from index fund reallocation has been absorbed and bullish long-term demand prospects will underpin prices, he added.

 

However, bearish South American weather conditions, ample nearby supplies and light hedge related selling managed to provide light pressure to cap upside movement, a CBOT floor analyst said.

 

The DTN Meteorlogix Weather forecast said generally favorable crop weather conditions continue in South America. A brief dry spell is occurring in Argentina, but showers are in store for late this week, which will limit crop stress. In Brazil, showers remain a major feature of the weather patterns for both northern and southern Brazil, along with normal to above normal temperatures. There is some potential for soybean rust to break out in a large scale over Mato Grosso and Goias provinces due to the persistence of warm and showery weather, Meteorlogix reports.

 

In pit trades, Man Financial bought 1,000 March, Prudential Financial bought 1,000 May, Fimat and Fortis each bought 400 March, with Stern buying 300 March. Speculative buying was estimated at 4,000 contracts.

 

On the sell side, Calyon Financial sold 400 March, JP Morgan sold 300 March with additional sales widely scattered among various commission houses.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board. Soymeal futures rallied to new contract highs in unison with soybeans. The market was buoyed by technically inspired buying, product spreading and ideas higher soy prices are adding value to soymeal.

 

Soyoil futures ended higher, recovering from earlier declines. The market gained support from the rest of the soycomplex, with a rebound in crude oil futures generating support as well, traders said.

 

March oil share ended at 40.39% and the March crush ended at 67 cents.

 

In soymeal trades, Speculative fund buying was estimated near 4,000 lots, with Fortis a buyer of 800 March, ADM Investor Services a buyer of 500 March, and Fimat and Rand Financial each buying 300 March. JP Morgan sold 500 March and 1,100 May.

 

In soyoil trades, Citigroup bought 500 March and 700 May, Fimat and Rand Financial each bought 500 March, with ADM Investor Services a buyer of 800 March. Speculative fund buying was estimated at 4,000 lots. UBS Securities sold 600 May and 600 July, Citigroup sold 800 July, and Iowa Grain sold 500 March.