February 17, 2006

 

CBOT Soy Review on Thursday: Late fund buying lifts beans to 1-Wk highs

 

 

Soybean futures on the Chicago Board of Trade closed firmer Thursday as late speculative and fund buying took the market to one-week highs ahead of the closing bell in an otherwise choppy session, traders and analysts said.

 

Most-active May soybeans gained 5 1/4 cents to US$6.04 1/4 a bushel and March beans rose 4 1/2 cents to US$5.91 1/2. May soymeal was up US$1.10 to US$185.50 a short tonne and May soyoil was up 31 points to 22.98 cents a pound.

 

"There wasn't really any (market-moving) news. The exports were OK but nothing special, and of course that was known before the opening," said Doug Harper, analyst at Brock Associates in Milwaukee.

 

"So I would have to assume most of that was fund buying," he added.

 

Soybean export sales for 2005-06 in the week to Feb. 9 were a net 529,600 metric tonnes, with 100,000 tonnes of 2006-07 soybeans sold, the U.S. Department of Agriculture said Thursday. China was the best customer, buying 360,300 tonnes, including 220,000 tonnes that were switched from unknown destinations.

 

Total exports were pegged at 988,200 tonnes, up 47% from the previous week and 48% higher than the prior four-week average. China was the primary destination at 531,300 tonnes.

 

The exports fell within the range of expectations, however, and weren't considered a major supportive factor in the market, sources said.

 

New acreage and ending stocks projections were issued from the U.S. Department of Agriculture's annual Agricultural Outlook Forum in Arlingtonne, Va., and presented the market with mixed but relatively unsurprising news.

 

U.S. soybean acreage estimates for 2006-07 were raised by 2 million to 74 million acres, as the USDA cited higher CBOT prices and a shift away from fertilizer-intensive crops such as corn amid high energy prices.

 

The USDA also said that 2006-07 ending stocks will likely remain unchanged. Ending stocks for 2005-06 are estimated at a record 555 million bushels. Market talk earlier this week had focused on the possibility the USDA would increase its 2006-07 stocks projection above 600 million bushels.

 

"I don't think they're (estimates) real surprising. We were actually using a larger acreage figure than that and therefore a larger carryover than that, but that's well within trade expectations," Harper said.

 

Meanwhile, there are concerns in the market over the hot and dry conditions in Argentina, though the country should still produce "a very large crop," Harper said.

 

No significant rains are expected in Argentina over the next five to seven days and high temperatures will range from the high 90s to 100 Fahrenheit, which will stress the soy crops. Long-range charts show a cold front moving in later Wednesday or Thursday, DTN Meteorlogix said.

 

Brazil's Mato Grosso and Mato Grosso do Sul are expected to see scattered showers with 0.20-0.75 inch of rain, and those showers are forecast to continue through next Monday. Farther south, in Parana and Rio Grande do Sul, scattered showers are forecast to continue through Thursday, with 0.20-0.75 inch expected. Mostly dry conditions are expected to set in by Thursday and continue through the weekend in Rio Grande do Sul, with only scattered showers possible. Thundershowers are forecast for northern Parana Saturday through Monday, however.

 

May soybeans reached a one-week high of US$6.05 and even pierced 40-day- moving-average resistance at US$6.03 1/2 on its climb. The settlement just above this level may be encouraging for market bulls, a trader said.

 

At the CBOT, Fimat bought 800 May beans, Refco and Rosenthal each bought 500 May, O'Connor bought 400 May, Prudential Financial bought 300 July and Goldenberg-Hehmeyer bought 200 May.

 

Funds bought an estimated 1,300 soybean contracts, which didn't include the late buying interest.

 

 

SOY PRODUCTS

 

Soy product markets closed firmer, led by strength in oil and the late rally in soybeans.

 

Soyoil received a boost from news that India raised crude palm oil and soybean oil prices to reflect rising global values. The base price for imported CPO was raised to US$426 per metric tonne from US$412, while the base soyoil price was raised to US$501 a tonne from US$484 a tonne.

 

Soyoil export sales for 2005-06 were a negative 3,300 tonnes, while 2006-07 sales totaled 5,400 tonnes, which were switched from 2005-06 sales to Mexico.

 

May oil hit a one-week high of 23.00 cents a pound and mustered enough strength to close above 100-day-moving-average resistance found at 22.92 cents.

 

In oil, Bunge bought 500 May, Iowa Grain bought 500 March, O'Connor bought 400 July, Calyon and Goldenberg each bought 300 March, J.P. Morgan bought 300 May and R.J. O'Brien and Rand Financial each bought 200 May. Rand Financial also sold 400 March and Cargill sold 600 May.

 

Funds bought an estimated 2,000 oil contracts.

 

May soymeal equaled Wednesday top of US$185.70, which has been a popular resistance area since last week.

 

Export sales for 2005-06 soymeal were a net 152,900 tonnes, higher than most expectations centering on sales of 75,000-125,000 tonnes. In addition, 100,000 tonnes of 2006-07 meal was sold, the USDA said.

 

In meal, buyers and sellers were light and scattered.