January 21, 2006

 

CBOT Soy Review on Friday: Ends up on sales data, commercial buys

 

 

Chicago Board of Trade soybean futures ended higher Friday, managing to stage a modest technical bounce from recent losses, buoyed by strong weekly export sales data and commercial buying.

 

March soybeans finished 3 cents higher at US$5.68; March soymeal settled US$1.00 higher at US$179.40 a short tonne; and March soyoil ended 20 points higher at 21.28 cents a pound.

 

Technically oversold conditions attracted short-covering interest, with higher-than-expected export sales data and talk of China securing additional U.S. supplies ahead of Lunar New Year holidays serving as the catalysts to support higher price action, analysts said.

 

Traders were encouraged by the market's ability to hold up fairly well in the face of bearish fundamentals, with technical support emerging once the active March futures filled a chart gap up to US$5.69 1/2. However, the subsequent climb above US$5.70 failed to attract much follow-through buying, with prices easing into a narrow range for the remainder of the day.

 

Commercial buying was a feature that supported prices as well, with traders viewing the buying as pricing for additional export business. China was rumored to be securing a few cargoes of U.S. supplies ahead of next week's holiday break, traders said.

 

Favorable weather conditions for South American crops remain a hindrance to upside potential, but with soybeans overdue for a bounce after closing lower in nine of the last 10 trading days and supportive export news finally emerging, futures managed to carve out light gains, said a CBOT commission house broker.

 

The 2005-06 marketing year export sales from the U.S. Department of Agriculture were 1,278,700 metric tonnes, and 2006-07 marketing year sales totaled 72,000 tonnes. Pre-release analysts' estimates ranged from 650,000 to 850,000 tonnes.

 

The DTN Meteorlogix forecast said Argentina's central soybean belt had good rainfall during the past two weeks, but now faces a round of warmer and drier weather going into the last part of January. Upper-atmosphere high pressure now centered in southeast Brazil will move west and south to northern and central Argentina next week. With this high pressure heading into the northern sector of Argentina, a drier and potentially hotter weather pattern is in store for Argentina's corn and soybean belt.

 

Elsewhere in South America, crop conditions remain generally favorable for Brazil's soybeans. Southern Brazil, especially, is in line to take in up to 1.5 inches of rain in Rio Grande do Sul through Parana provinces during the next five days, Meteorlogix said.

 

In pit trades, ADM Investor Services, Bunge Chicago, Calyon Financial, Tenco and UBS Securities each bought 500 March.

 

South American soybean futures ended higher. The March futures finished 3 cents higher at US$6.00.

 

 

SOY PRODUCTS

 

Soymeal futures ended Friday's session posting light gains, but lost product share to soyoil. Supportive weekly export sales provided strength to prices initially, but without strong follow-through momentum, weakening cash basis levels and lingering fears of potential feed demand slowdowns due to bird flu overseas, upside potential was limited.

 

Soyoil futures ended firm, settling at a four-session high. Consolidative action was a featured attraction, and technical buying helped futures stage a modest recovery from prior losses. March oil share improved to 37.23%, and the March crush was at 60 3/4 cents. Soymeal sales were 158,900 tonnes compared to estimates of 25,000 to 125,000 tonnes.

 

In soymeal trades, Bunge Chicago bought 300 March; JP Morgan bought 400 May; Fimat sold 500 March; and RJ O'Brien and Rosenthal each sold 300 March.

 

In soyoil trades, Man Financial, Fimat, RJ O'Brien and Rand Financial each bought 400 March; Citigroup bought 300 July; and ADM Investor Services bought 300 March. Calyon Financial sold 500 March; Bunge Chicago and Man Financial each sold 300 March; and JP Morgan sold 400 May.