February 5, 2008

 

CBOT Soy Review on Monday: Soars on speculative, technical buys, spillover

 

 

Chicago Board of Trade soybean futures ended sharply higher Monday, rallying to three-week highs on speculative fund buying, bullish technical momentum and soaring wheat futures.

 

March soybeans ended 38 3/4 cents higher at US$13.26, July soybeans finished 38 1/2 cents higher at US$13.58 1/2 and November soybeans ended 40 1/2 cents higher at US$12.94 1/2. March soymeal settled US$9.70 higher at US$352.90 per short tonne. March soyoil finished 164 points higher at 55.76 cents per pound.

 

The absence of any bearish inputs to derail bullish upside momentum allowed follow-through speculative buying from Friday's gains to propel futures to higher levels, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Technically motivated buying was featured, with worries over harvest delays in northern Brazil as well as dryness issues in southern Brazil generating underlying price strength, analysts said.

 

Meanwhile, with Minneapolis spring wheat continuing to charge higher, the battle for acres has moved to the forefront, as the markets take on a bullish psychology amid ideas soybeans can't afford to not to climb with wheat in order to attract needed acres to meet demand, said Roger Knapp, analyst with STA Trading Services in Memphis, Tenn.

 

Minneapolis March spring wheat futures rose to uncharted territory once again, ending 30 cents higher at US$14.33 a bushel.

 

Otherwise, a lack of aggressive selling made upside movement the path of least resistance, with outlooks for tightening ending supply forecasts and strong gains in the soy products adding strength to keep prices climbing higher, analysts added.

 

The DTN Meteorlogix weather forecast said central Brazil soybean provinces of Mato Grosso and Goias had rainfall of up to two and one-half inches during the past weekend. Additional heavy rains are in store this week, totaling up to an additional two and one-half inches. This heavy rain comes on the heels of January rainfall that was well above average in northern Brazil soybean country, Meteorlogix said. This very wet weather promises to bring more slowdowns in harvest and declines in crop quality, and increasing concerns of soybean rust are also very possible with this wet pattern, Meteorlogix added.

 

Meanwhile, Cropcast Weather Services said weekend rains failed to cover much of Brazil's Rio Grande do Sul, leaving much of the prime crop areas of the northwestern part of the state with little or any rainfall. Persistent dryness in Parana during the past few weeks is allowing for some concerns to build through the southwestern third of the soybean belt, Cropcast said. Rains are very unlikely in these areas this week, but a system is showing up on weather models for early next week. "This will likely be critical to prevent more serious yield losses from becoming a threat as pod setting increases," Cropcast added.

 

In pit trades, buyers and sellers were scattered with speculative fund buying estimated near 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures climbed Monday, with soyoil futures rallying to new all-time highs. Bullish technical momentum, underlying demand and spillover strength from crude oil allowed for fresh speculative fund buying to remain the common theme in soyoil futures, analysts say.

 

Soymeal futures rallied in unison with the rest of the soy complex, energized carryover speculative fund buying, analysts say. However, upside continues to lag behind advances in soyoil amid the need to keep the crush spread relationship in line, a cash-connected CBOT broker said.

 

March oil share ended at 44.13% and the March crush ended at 63 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered with speculative fund buying estimated near 3,000 lots.

 

In soyoil trades, buyers and sellers were scattered with speculative fund buying estimated near 3,000 lots.