January 25, 2008

 

CBOT Soy Review on Thursday: Bounce higher; speculative buys, outside markets

 

 

Chicago Board of Trade soybean futures ended sharply higher Thursday, bouncing from the corrective setbacks of the week on speculative buying tied to recoveries in outside markets.

 

March soybeans ended 41 cents higher at US$12.30 1/2, July soybeans finished 43 cents higher at US$12.63 3/4 and November soybeans ended 47 1/2 cents higher at US$12.15. March soymeal settled US$9.40 higher at US$332.20 per short tonne. March soyoil finished 200 points higher at 51.68 cents per pound.

 

The absence of fresh fundamental news kept the movements of outside markets in focus, with the exhaustion of speculative long liquidation allowing higher outside markets to give direction to futures, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

The heavy losses incurred in previous sessions had dropped prices to technical levels that traders viewed as buying opportunities based on longer range fundamentals, uncovering bargain hunting buying, Hannagan added.

 

Underlying support was generated from the recurring theme that the markets needs to buy spring acres, and with spring wheat and corn futures soaring limit up, soybeans had to keep pace, analysts said.

 

Otherwise, activity was relative subdued, but outlooks for a pick up in export demand following the recent price slide, with rumor China securing U.S. and South American cargoes this week served as a supportive feature as well, traders said.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EST. Trade estimates put soybean export sales at 600,000 to 900,000 metric tonnes. Soymeal sales are projected in a range of 75,000 to 125,000 metric tonnes, with soy oil sales expected in a range from 10,000 to 20,000 tonnes.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated between 6,000 and 7,000 lots

 

 

SOY PRODUCTS

 

Soy product futures ended sharply higher, with nearby soyoil futures soaring limit up. Soyoil futures were buoyed by speculative buying, recovering from previous declines on exhausted selling, spillover from outside markets, supportive stocks data in the Census crush report and technically motivated buying, analysts said.

 

Soymeal futures ended higher across the board, rallying in unison with the rest of the complex, but oil/meal spreading to keep crush margins inline limited upside movement in meal futures, analysts said. Meanwhile, higher-than-expected meal stocks in the Census crush report applied light pressure, while good underlying feed demand generated support, analysts added.

 

In soymeal trades, J.P. Morgan bought 1,200 December, with additional buying and selling scattered among various commission houses. Speculative fund buying was estimated at 4,000 lots.

 

In soyoil trades, ADM Investor Services, and Tenco each bought 300 March, J.P. Morgan bought 300 July, and Fortis bought 400 March. Bunge Chicago sold 300 March, and MF Global sold 500 March. Speculative fund buying was estimated at 4,000 lots.