February 20, 2008

 

CBOT Soy Review on Tuesday: New highs on China demand, outside strength

 

 

Chicago Board of Trade soybean futures ended sharply higher Tuesday, rallying to new all-time highs on speculative buying associated with Chinese demand and the bullish influence of outside markets.

 

March soybeans ended 24 3/4 cents higher at US$13.98 1/2, May soybeans settled 26 1/2 cents higher at US$14.17 3/4, July soybeans finished 27 1/2 cents higher at US$14.30 and November soybeans ended 43 cents higher at US$13.60 1/2. March soymeal settled US$2.90 higher at US$361.70 per short tonne. March soyoil finished 164 points higher at 60.21 cents per pound.

 

The new bullish wrinkle in the market is China increasing its purchases of soybeans and soyoil due to losses in its rapeseed crop, and that continues to provide a fundamental boost to keep buyers enthused, said John Kleist, analyst with Kleist Ag Consulting.

 

Spillover momentum from surging energy and metal futures in conjunction with a weaker U.S. dollar added strength to keep futures climbing to historic levels, analysts said.

 

The absence of any bearish news to change market psychology coupled with market shorts being hurt on every up move helped provide technical strength to the market as well, Kleist added.

 

The ability of March futures to push above the psychological US$14.00-per-bushel level provided a technical boost to keep sellers on the run as well.

 

The back end of the market raced higher also, with prices rallying in an attempt buy additional spring acres as well as attempt to provide a last-minute influence on the U.S. Department of Agriculture ahead of Thursday's Agricultural Outlook Forum, analysts said.

 

The market followed its typical path of racing to new highs before trimming the gains on profit-taking through midday. However, a lack of follow-through selling attributed to new longs entering the market and shorts trying to get out on breaks limited losses and subsequently propelled prices heading down the stretch, a floor trader added.

 

Traders will continue to look for continued strength, but without a fresh spark to extend the gains, profit-taking could be waiting on every turn in the market, particularly with prices at historic highs, the trader added.

 

In pit trades, buyers and sellers were scattered among various commission houses, with Iowa Grain and Tenco featured buyers. Speculative fund buying was estimated between 3,000 and 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, with soyoil futures rising to record highs.

 

Soyoil futures rallied to new all-time highs, energized by speculative-based buying, with carryover momentum from last week's news of China needing to import more vegoils amid losses in its rapeseed crop a bullish influence, analysts said. Spillover strength from crude oil soaring to the historic US$100.00-a-barrel level helped sustain the price strength, with technical and speculative buying featured.

 

Soymeal futures ended higher, up in unison with the rest of the complex. Soymeal continues to be the slowest gainer in the complex, unable to challenge its contract highs, as oil/meal spreading limits the market's upward mobility, analysts said.

 

March oil share ended at 45.42% and the March crush ended at 59 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative funds net buyers on the day.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated between 3,000 and 4,000 lots.