January 31, 2006

 

CBOT Soy Review on Monday: Up on spec buys; Argentina weather eyed

 

 

Chicago Board of Trade soybean futures ended firm Monday, extending Friday's price bounce on technically motivated buying and concerns over a hot and dry weather pattern in Argentina.

 

March soybeans finished 9 1/2 cents higher at $5.98 3/4, March soymeal settled $1.80 higher at $188.20 a short tonne, while March soyoil ended 15 points higher at 22.20 cent a pound.

 

The combination of technical momentum and weather concerns served as the catalysts to propel prices to new three-week highs, analysts said.

 

Speculative-led buying fueled the advances, with market shorts running for cover as the market added risk premium in the face of hot and dry weather conditions for Argentine crops moving through their flowering stage of development.

 

The theme was consistent from the outset, with the nearby March contract climbing above the psychological $6 per bushel level for the first time since Jan. 6. The explosive early push enabled futures to filter into a chart gap between $5.99 and $6.10 also. However, the inability of the market to attract follow through momentum at session highs coupled with hedge related selling provided overhead pressure to send prices backpedaling below the $6 level for the remainder of the day, traders said.

 

The DTN Meteorlogix forecast said only isolated showers are expected through Wednesday in Argentina. Temperatures will remain above to much above normal Tuesday, with only slight cooling Wednesday through Friday. The next notable chance for showers is not until next Saturday night into Sunday. Crop conditions are returning to a stressful level after good rains a couple of weeks ago, Meteorlogix added.

 

In Brazil, Rio Grande do Sul province in the far south has some hot and dry weather ahead during this week. The remainder of the country has mostly favorable crop conditions. Rio Grande do Sul, along with Argentina, has a chance at rainfall to relieve stress by next weekend, Meteorlogix said.

 

The U.S. Department of Agriculture said soybeans inspected for export in the week ended Jan. 26 totaled 18.855 million bushels. The export figure was down 42.8% from last week. Analysts expected soybean inspections in a range of 22 million to 30 million bushels. Accumulated soybean export inspections for the 2005-06 marketing year total 488.091 million bushels, down 25.3% from last year at the same time.

 

Argentina's year-on-year soybean exports soared in December as China, the world's top soybean importer, bought heavily from the South American nation, the Agriculture Secretariat reported late Friday. Argentina exported 194,761 metric tonnes of December soybeans, up 1,654% from just 11,101 tonnes a year ago, with China accounting for 78% of Argentina's soybean exports in December.

 

In pit trades, ABN Amro bought 1,000 March, RJ O'Brien bought 900 March, Tenco bought 500 March, Rand Financial, Fimat and UBS Securities each bought 400 March. Man Financial sold 1,000 July, Refco division of Man Financial sold 800 March, Calyon Financial and Rand Financial each sold 500 March and ABN Amro sold 400 March. Commodity fund buying was pegged between 3,000 and 4,000 lots.

 

South American soybean futures ended higher. The March futures finished 10 cents higher at $6.29.

 

SOY PRODUCTS

 

Soymeal futures ended firm, continuing their ascent to higher levels in step with soybeans. Technical strength was seen as a supportive feature, with the active March contract able to satisfy a near term objective filling a chart gap up to $188.30.

 

Soyoil futures rallied in step with the rest of the soy complex, gapping higher on technically inspired speculative buying. March oil share ended at 37.10%, and the March crush was at 59 1/2 cents.

 

In soymeal trades, Man Financial and RJ O'Brien were featured buyers, with ADM Investors and Cargill key sellers.

 

In soyoil trades, Bunge Chicago bought 300 March, ABN Amro bought 400 March, JP Morgan bought 700 March, Fimat bought 1,400 March and Tenco bought 800 March. O'Connor sold 1,200 March, with Citigroup, Fimat, Man Financial, and Rand Financial each selling 300 March. Commodity funds were net buyers on the day.