February 9, 2008

 

CBOT Soy Review on Friday: Up, well off highs; speculative profit-taking

 

 

Chicago Board of Trade soybean futures ended higher Friday, but well off earlier highs, as late profit-taking pressure trimmed gains.

 

March soybeans ended 7 1/2 cents higher at US$13.39, July soybeans finished 5 3/4 cents higher at US$13.68 and November soybeans ended 4 cents higher at US$12.85. March soymeal settled US$0.20 lower at US$361.50 per short tonne. March soyoil finished 30 points higher at 55.42 cents per pound.

 

The market remains bullishly energized by speculative buying, with spillover support from limit-up wheat futures, confirmation of a tighter U.S. balance sheet and broadbased strength in outside inflationary markets underpinning futures, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The nearby March futures managed to carve out a new contract high, but the market's inability to find follow- through buying at the highs unleashed pre-weekend profit- taking pressure to send buyers running for cover, analysts said.

 

The slide in prices was exaggerated by an air pocket of bids under the market. Traders remained fearful of Wednesday's key reversal slide that saw prices fall from limit-up levels into negative territory, analysts added.

 

There remains a lot of uncertainty in the marketplace as prices trade at historic levels, a CBOT floor broker said. Traders are leery of pushing the market to uncharted territory, but looking forward market bulls remain encouraged by an unwillingness of traders go home short, as prices bounced back from late losses to post moderate gains, he added.

 

The U.S. Department of Agriculture's tightening of the U.S. balance sheet served as confirmation of stout demand and raised concerns that any weather issue in South America or the U.S. growing seasons this year could have serious consequences for U.S. inventories moving forward, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The USDA cut 2007-08 soybean ending stocks by 15 million bushels to 160 million from the 175 million bushels forecast in January, and below the average analyst guess of 167 million bushels. The USDA increased exports by 10 million bushels to 1.005 billion bushels and raised the crush by 5 million to 1.835 billion bushels.

 

In pit trades, buyers and sellers were scattered among various commission houses, and speculative funds were estimated buyers of 3,000 lots.

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal backpedaling from earlier gains on late profit-taking pressure. Soymeal futures ended lower, unable to sustain earlier gains that produced new contract highs, analysts said. Supportive demand outlooks served as a spark to lift futures initially, but once buying was exhausted at the highs, speculative profit-taking surfaced to weigh on prices, analysts added.

 

Soyoil futures ended higher after a volatile session, with late meal/oil spreading unwinding providing a boost to buoy prices, analysts said. Spillover support from sharply higher crude oil futures aided the supportive theme despite larger stocks reported in the supply and demand report, analysts added.

 

March oil share ended at 43.39% and the March crush ended at 66 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative funds estimated buyers of 3,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, and speculative funds were estimated buyers of 3,000 lots.