February 16, 2007

 

CBOT Soy Review on Thursday: Technical, fund buying boosts prices

 

 

Chicago Board of Trade soybean futures set new contract highs amid fund and technical-led speculative buying, sources said.

 

March soybeans closed 8 1/4 cents higher at US$7.58 3/4, and May soybeans ended 8 1/4 cents higher at US$7.74 3/4. March soymeal ended up US$2.50 at US$225.10, while March soyoil closed 8 points higher at 29.76 cents per pound.

 

March soybeans set a new contract high of US$7.59 1/2, exceeding the pervious high of US$7.57 1/2. May soybeans set a new high of US$7.75 1/2, topping the pervious contract high of US$7.73 1/2.

 

Fund buying of an estimated 2,000 contracts helped support prices, floor traders said.

 

There was a general lack of fresh fundamental news, so trading was largely technical and focused on long-range concerns about an expected decline in acreage this spring, sources said. Farmers are expected to plant corn instead of soybeans to take advantage of high prices associated with growing demand for ethanol.

 

Soybean prices continue to stay strong as they work to catch up to gains corn has made, said Dan Zwicker, senior analyst for AgriVisor.

 

"In order for beans to be competitive in the acreage mix, beans have to be at a higher level," Zwicker said. "Without them being competitive, you run the risk of them losing a larger acreage drop than anyone is talking about."

 

Unwinding of long corn/short soybean spreads and long wheat/short soybean spreads also was likely a supportive feature for soybeans during the day session, Zwicker added.

 

"With a lack of new news, you're just seeing some spread unwinding today," Zwicker said.

 

In pit trades, Tenco bought 1,000 March, while Calyon bought 400 March and Fortis bought 300 March. Rand Financial bought 300 March and sold 400 March. JP Morgan and RJ O'Brien each sold 300 March. Bunge sold 300 May.

 

JP Morgan, FC Stonnee and Fimat each spread 1,800 March/May. Shatkin Arbor spread 1,600 May/March.

 

Concerns about excessive rain in Brazil also remained bullish for prices, analysts said.

 

The main soybean-producing province in Brazil, Mato Grosso, has had numerous delays in soybean harvest during February because of persistent rains, according to DTN Meteorlogix. Quality losses in soybeans have been noted, the weather firm reported.

 

The next three days should bring a brief period of drier weather to Mato Grosso, which will allow more harvest progress. However, the province is in need of more dry conditions to allow a more active harvest, Meteorlogix said.

 

Looking ahead, traders are waiting for the U.S. Department of Agriculture to release planting estimates at the end of March, sources said. Until then, soybean prices should stay strong on concerns about the U.S. acreage decrease and the harvest in Brazil.

 

By the time the report is released, the market also will have a better sense of spring planting weather in the U.S., Zwicker noted.

 

On Friday, the USDA will release weekly export sales for the week ended Feb. 8. Analysts surveyed by Dow Jones Newswires estimate sales will be between 450,000 and 700,000 metric tonnes.

 

 

SOY PRODUCTS

 

CBOT soybean product futures ended in positive territory as soymeal set a new contract high, floor sources said. March soymeal set a new contract high of US$226.30 per short tonne, exceeding the previous high of US$224.60.

 

Funds bought and estimated 2,000 soymeal and 3,000 soyoil.

 

There also was some spillover support from advances in soybeans. Soyoil's gains, however, were capped by weakness in crude oil futures, floor traders said.

 

In soymeal pit trades, Tenco bought 500 May. In soyoil pit trades, Citigroup bought 1,000 March and 900 May. Fimat bought 400 March, while JP Morgan sold 400 March.

 

Spread trading was a feature of the day session, sources said. In soymeal, Man Financial spread 2,000 May/March, while Tenco and FC Stonnee each spread 500 March/May. JP Morgan spread 400 March/May, and Iowa Grains spread 500 November/July.

 

In soyoil spread trades, Shatkin Arbor spread 1,700 May/March.

 

For weekly export sales, analysts predict soymeal sales will range from 75,000 to 150,000 and soyoil sales will range from zero to 10,000.