February 4, 2006

 

CBOT Soy Review on Friday: Rallies on tech buys, grain spillover

 

 

Chicago Board of Trade soybean futures rallied Friday, propelled by technically based buying, with spillover strength from corn and soybeans providing support to lift prices in the face of bearish fundamentals.

 

March soybeans finished 10 3/4 cents higher at US$5.94 3/4, March soymeal settled US$2.10 higher at US$184.00 a short tonne, while March soyoil ended 71 points higher at 22.66 cent a pound. For the week, March soybeans were up 5 1/2 cents, March soymeal dropped US$2.40 and March soyoil gained 61 points.

 

The market was buoyed by speculative fund and local buying, as the psychology of the trade has taken an interest in buying the market, said Don Roose, president US Commodities in West Des Moines, Iowa.

 

Traders said futures have shown good technical strength recently, and the March contract's inability to penetrate underlying support ignited enough speculative interest for futures to play catch up with the impressive price strength in wheat and corn futures.

 

This was consistent after a choppy start, with advances accelerating near midday, as pre-placed buy orders were activated. Traders said buy stops were laddered between US$5.89 1/4 and US$5.95, a source of major moving averages, before selling pressure emerged as prices neared the psychological US$6.00 per bushel level.

 

The compelling story today was fund buying, with supportive technicals laying the ground work for the gains, said Roose. However, with rains in Argentina and abundant inventories, the advances still have to be viewed as short term supportive, he added.

 

The DTN Meteorlogix forecast said South America's major soybean areas, from Argentina north through central Brazil, have a favorable crop weather pattern ahead. A cold front currently over the corn and soybean areas of central Argentina will slowly move northward during the next seven days, bringing beneficial rainfall to most major soybean areas.

 

In pit trades, ADM Investor Services and Goldenberg Hehmeyer each bought 400 March, Man Financial bought 700 March, Refco bought 800 March and RJ O'Brien bought 1,500 March. UBS Securities was a seller of 1,300 March and 700 May, Tenco sold 900 March, JP Morgan sold 500 March and 1,500 July. Commodity fund buying was estimated between 4,000 and 5,000 contracts.

 

South American soybean futures ended higher across the board. The March futures finished 10 cents higher at US$6.15.

 

 

SOY PRODUCTS

 

Soymeal futures ended up in step with soybeans, bolstered by technically inspired buying. The active March futures were able to satisfy a near term upside technical objective of filling a chart gap between US$182.50 and US$184.50, in route to breaching resistance at its key 50-day moving average before profit taking trimmed the gains.

 

March oil share ended at 38.11%, and the March crush was at 59 1/4 cents.

 

Soyoil futures soared to 1-month highs, catapulting higher on technically based speculative buying. The market was able to capture product share, as the market broke out of a consolidation phase in the midst of renewed speculative buying interest.

 

In soymeal trades, buyers and sellers were scattered among various firms.

 

In soyoil trades, Calyon Financial, Prudential Financial, Refco and Rosenthal were featured buyers, commodity fund buying estimated at near 3,000 lots. JP Morgan, Goldenberg Hehmeyer and Tenco were key sellers on the day.