January 31, 2007

 

CBOT Soy Review on Tuesday: Higher on speculative, fund buying

 

 

Speculative and fund buying carried Chicago Board of Trade soybean futures to a higher close Tuesday, with underlying support seen from bullishness about demand and possible dryness in South America, analysts said.

 

A rally in crude oil futures also supported the entire soy complex, a source added.

 

March soybeans finished 11 1/2 cents higher at US$7.21, and May soybeans ended 11 1/2 cents higher at US$7.36 1/4. March soyoil closed 64 points higher at 29.46 cents per pound, and March soymeal ended up US$2.00 at US$208.40 per short tonne.

 

The gains came after soybean futures settled in negative territory for the previous four trading sessions. The market was due to bounce higher but could not sustain a temporary rally Monday, a floor source said.

 

Speculative-led buying, however, pushed prices higher Tuesday after soybean futures opened lower on carryover weakness from the overnight, the source noted. March soybeans then felt a technical boost after trading above Monday's high of US$7.14 1/2, a trader said.

 

The March contract closed at its highest level since Jan. 23.

 

Higher-than-expected weekly export inspection data released Monday that showed strong buying interest from China was among the supportive factors, sources said.

 

"I think there's been a lot of Chinese pricing in the market the last couple days," noted Dan Basse, president of AgResource Co.

 

Fund buying of an estimated 3,000 contracts also shoved soybeans higher, sources said.

 

On the weather front, concerns about dryness in Argentina were supportive, Basse added.

 

Argentina is dry in the east, while western areas are getting some mostly light showers with scattered heavier rainfall, the DTN Meteorlogix weather firm reported. The rest of the week will be mostly dry with temperatures climbing into the 90s, especially in the southwest growing areas, firm noted.

 

"Some people are talking about maybe a pattern change down there," Basse said.

 

In the southern Brazilian states of Parana and Rio Grande do Sul, conditions are mostly dry and warm with a few showers to the north, Meteorlogix added. As the week progresses, temperatures will turn cooler, the firm noted. Rainfall should increase but stay scattered.

 

Farther north, in Mato Grosso and Mato Grosso do Sul, rainfall is scattered, with some heavier in Mato Grosso do Sul, Meteorlogix reported. Sporadic precipitation is expected to continue for the next several days.

 

Brazil's soy farmers this week are willing to gamble to see if soy prices will rise further and instead are selling corn, wheat and other farm commodities, brokers said Tuesday.

 

Estimates are that at least half the soy crop has been sold to traders already, with 70% gone in Mato Grosso, the No. 1 soy-producing state. Last year at this time, Mato Grosso sold 33% of its crop, said a soy market analyst at consulting group AgRural.

 

In CBOT pit trades, Iowa Grains and Man Financial each bought 500 March soybeans. Rand Financial bought 300 March, and Citigroup bought 300 May. Fimat sold 300 March.

 

Trading of the May/March spread also was another feature of the session, floor sources said.

 

Rand Financial spread 1,000 May/March. UBS spread 800 May/March. ABN Amro, Fimat, Iowa Grains and Tenco each spread 500 May/March. RJ O'Brien spread 500 March/May.

 

 

SOY PRODUCTS

 

CBOT soy product futures ended firmer on spillover support from other markets, notably crude oil, sources said.

 

A rally in crude oil futures pushed soyoil and the entire soy complex higher, an analyst said. Soymeal was seen following soybeans to the upside, a floor trader said.

 

Fund buying of an estimated 3,500 soyoil contracts also was a supportive feature, traders said.

 

In soyoil pit trades, Tenco bought 1,000 July, and FC Stonnee bought 1,000 January. JP Morgan bought 800 March and sold 900 March. ADM bought 600 May, while Man Financial bought 500 March. Citigroup and Goldberg Hehmeyer each sold 500 March. UBS spread 500 May/March.

 

In soymeal pit trades, funds were seen as even.