January 24, 2006

 

CBOT Soy Review on Monday: Extends recovery on technical buying

 

 

Chicago Board of Trade soybean futures ended firm Monday, extending Friday's recovery from recent declines on technically motivated buying and uncertainty tied to South American weather outlooks.

 

March soybeans finished 6 1/2 cents higher at US$5.74 1/2, March soymeal settled US$1.10 higher at US$180.50 a short tonne, and March soyoil ended 24 points higher at 21.52 cents a pound.

 

The market managed to bounce again Monday, finding support from oversold ideas following a recent string of declines that produced losses in nine of the last 11 trading days heading into Monday's session, analysts said.

 

Traders said the market garnered mild support from conflicting weather forecast for South America, with some private forecasters projecting warmer and drier conditions for parts of the region over the next 10 days. However, conflicting forecasts calling for favorable conditions managed to limit upside potential, with futures unable to challenge last week's highs.

 

Nevertheless, the market still managed to hold up fairly well in face of bearish fundamentals, with a higher-than-anticipated weekly export inspections figure providing mild support to keep prices firmly planted in positive territory, traders added.

 

The U.S. Department of Agriculture said soybeans inspected for export in the week ended Jan. 19 totaled 30.395 million bushels. The export figure was up 61.7% from last week. Analysts expected soybean inspections in a range of 18 million to 25 million bushels. Accumulated soybean export inspections for the 2005-06 marketing year total 466.177 million bushels, down 25.6% from last year at the same time.

 

The DTN Meteorlogix forecast said South America's soybean belt, from Argentina north through northern Brazil, has generally favorable crop weather conditions during the last part of January. Some hot weather of nearly 100 degrees Fahrenheit occurred during the weekend in Mato Grosso, but southern Brazil through Argentina had mostly seasonal to slightly below-normal temperatures. Rain is in store for Parana through Rio Grande do Sul during this first half of the week. Argentina has a mix of showers and warm temperatures this week, but no stressfully hot weather in its forecast, Meteorlogix said.

 

In pit trades, Fimat bought 700 March, Rand Financial bought 600 March, Refco bought 400 March, Rosenthal bought 300 July, and UBS Securities bought 500 March. On the sell side, Calyon Financial sold 500 March, JP Morgan sold 600 March, and Refco sold 700 March. Commodity fund selling was pegged at 1,500 lots.

 

South American soybean futures ended higher. The March futures finished 6 cents higher at US$6.06.

 

 

Soy Products

 

Soymeal futures climbed in unison with soybeans, underpinned by speculative buying, as the market continued its consolidation from prior lows. The theme was consistent throughout the day, but resistance near the March futures 100-day moving average - US$182.10 - managed to stem the tide of advances.

 

Soyoil futures climbed to over one-week highs, fueled by speculative buying as the market broke out of a sideways trading pattern. Spillover momentum from soybeans and technical buying were featured attractions in otherwise uneventful activity, traders said. March oil share improved to 37.35%, and the March crush was at 59 1/4 cents.

 

In soymeal trades, Fimat bought 1,000 March, JP Morgan bought 300 March, Citigroup sold 700 March and Refco sold 300 March. Commodity funds were net buyers on the day.

 

In soyoil trades, JP Morgan bought 1,200 March and RJ O'Brien bought 400 March. Citigroup sold 600 March Fimat sold 500 March, Rosenthal sold 400 March and Cargill sold 300 March. Fund buying was estimated between 1,000 and 2,000 contracts.