February 6, 2007

 

CBOT Soy Review on Monday: New contract highs on technical buying

 

 

Chicago Board of Trade soybean futures Monday set new contract highs and finished firmer on technical strength, analysts said.

 

March soybeans ended 3 1/4 cents firmer at US$7.40 per bushel, while May soybeans closed up 4 cents at US$7.56 1/2. March soyoil closed up 25 points at 30.62 cents per pound, and March soymeal ended US$0.30 lower at US$212.40 per short tonne.

 

March soybeans traded electronically at a fresh contract high of US$7.47 1/2 per bushel, exceeding the previous high of US$7.38 set on Friday. May soybeans traded electronically at a fresh contract high of US$7.63, topping Friday's contract high of US$7.53.

 

Soybean futures showed technical strength in posting fresh gains after a strong rally Friday and a move higher overnight, sources said.

 

"I think the charts are still positive," said Don Roose, president of U.S. Commodities.

 

Prices temporarily retreated into negative territory during the day session before finding strength again, a trader noted. Fund buying of an estimated 1,600 contracts helped support the turn-around, he said.

 

In pit trades, Tenco, UBS and USA Trading each bought 400 March. Rand Financial sold 600 March. JP Morgan spread 500 March/May.

 

The day's gains were also underpinned by concerns that soybeans will lose out on millions of acres this spring that will be planted with corn instead, sources said.

 

"That continues to push in here," Roose said about the acreage fears.

 

In other news, weekly U.S. soybean exports inspections were at the high end of analysts' expectations.

 

The U.S. Department of Agriculture reported inspections of 35.647 million bushels for the week ended Feb. 1, while analysts had predicted inspections totaling 29 million to 35 million. For the week ended Jan. 25, export inspections totaled 38.267 million, according to the USDA.

 

For the current market year to date, 645.425 million bushels have been inspected for export, up from 510.385 million at this point last year, the USDA said.

 

The latest inspection data "gave us a strong signal here that our export pace is still strong," Roose noted.

 

Sources added that it was impressive the soybeans ended higher even though dry areas of South America received more-than-expected levels of rain during the weekend.

 

Thunderstorms brought up to 1 1/2 inches of rain to southern Brazil and more than two inches of rain to northern Brazil during the weekend, according to DTN Meteorlogix. This week should bring more showers and thunderstorms, the weather firm reported.

 

Argentina saw rains of more than 1 inch over the weekend and has a very good prospect for widespread significant rainfall during the Thursday-through- Saturday period, Meteorlogix said.

 

The only area of concern is for a soybean rust outbreak in the central and northern areas of Brazil, but rust incidents thus far have been scattered and not nearly as extensive as the calamity that ravaged the Brazil soybean crop a few years ago, Meteorlogix said.

 

"Crop weather for corn and soybeans remains very favorable across South America," the weather firm said.

 

On Friday, the Commodity Futures Trading Commission reported in its supplemental commitment of traders report that index funds held net long positions totaling 133,886 combined CBOT soybean futures and options contracts as of Jan. 30, down slightly from 134,047 contracts the prior week. Traditional large speculative traders were net long 71,437 contracts, up from 66,233 contracts the previous week, the CFTC said.

 

 

SOY PRODUCTS

 

CBOT soy product futures finished mixed.

 

Fund buying, along with some commercial interest, helped support gains in soyoil, floor sources said. Funds bought an estimated 2,000 soyoil contracts and 800 soymeal contracts.

 

Soyoil also ended firmer despite spillover weakness from crude oil futures, a source added.

 

In soyoil pit trades, JP Morgan sold 600 May and bought 500 December. Fimat bought 500 March and spread 400 July/March.

 

Soymeal prices, meanwhile, were unable to penetrate some underlying support levels and stumbled lower, an analyst said. In soymeal pit trades, JP Morgan bought 800 March, and Man Financial bought 300 May.

 

Index funds were net long combined soyoil futures and options positions by 67,655 contracts, down from the previous week's 69,320 lots, according to the CFTC. Speculative funds were reported net long 54,934 contracts.

 

Large speculative traders were reported net long combined futures and options positions in soymeal by 33,566 lots, compared with net longs of 30,731 contracts last week, the CFTC reported.