February 22, 2007

  

CBOT Soy Review on Wednesday: Rallies to new contract highs

 

 

Chicago Board of Trade soybean futures Wednesday rallied to new contract highs amid fund buying and spillover support from the grains and outside markets, traders said.

 

March soybeans closed up 10 1/4 cents at US$7.81 1/4, while May soybeans finished 11 cents higher at US$7.98. March soymeal ended US$0.70 higher at US$231.30, and March soyoil closed 43 points up at 30.12 cents per pound.

 

March soybeans traded electronically at a new contract high of US$7.88 1/4 per bushel, exceeding the previous high of US$7.72 1/4. May soybeans on the screen set a new contract high of US$8.04 3/4, topping the previous high of US$7.88.

 

November soybeans, meanwhile, set a new contract high of US$8.38, exceeding the previous electronic high of US$8.23 1/2.

 

The gains in soybeans came as part of a broad-based commodity rally in which CBOT corn jumped to 10-year highs and CBOT wheat ended solidly firmer, traders noted. Advances in crude oil, silver and gold added to a bullish market sentiment that attracted speculative buyers, they said.

 

Fund activity also shoved soybean futures prices higher, a floor broker noted. Funds bought an estimated 2,000 contracts.

 

Sellers were scarce as the market anticipates U.S. farmers will plant fewer soybeans acres this spring, and nobody wants to be short ahead of acreage estimates due out in March, a floor broker said. Producers are expected to plant corn, instead of soybeans, to take advantage of growing demand for ethanol.

 

In pit trades, ADM bought 500 Nov, and JP Morgan bought 400 March. RJ O'Brien sold 1,000 Nov, while JP Morgan sold 600 Nov and Fimat sold 400 Nov.

 

Citigroup spread 500 May/March, and JP Morgan spread 400 March/May. Tenco, FCStone and Goldenberg Hehmeyer each spread 700 March/May, while RJ O'Brien spread 700 July/March.

 

Looking ahead, soybeans may continue to show technical strength after advancing to new contract highs for several sessions in a row, floor sources said. Although the market is in an overbought condition, traders want to stay long, a source noted.

 

For May soybeans, US$8.00 is a key resistance level, a technical analyst said. Marching beyond it can open the door to stronger price gains, as the technical resistance levels become fewer and far between as prices get closer to recent historic high levels, he said.

 

The U.S. Census Bureau on Thursday is scheduled to release its U.S. soybean crush report for January. The U.S. soybean crush is expected to be 155.9 million bushels in the U.S. Census Bureau's monthly report, down slightly from the December crush figure of 156.2 million, according to a survey of analysts.

 

The U.S. Department of Agriculture's weekly export sales report for the week ended Feb. 15 will be released after 8:30 a.m. EST (1230 GMT) Friday. The report, normally released on Thursday, has been delayed because the Federal Government was closed Monday for the Presidents Day holiday.

 

In other news, there are signs the Brazilian soybean-producing states of Mato Grosso and Mato Grosso do Sul may be drying up a bit.

 

After days of persistent rainfall that delayed the early harvest and caused concerns about crop damage, conditions have turned mostly dry, with up to a half inch of rain scattered across the region in the past 24 hours, DTN Meteorlogix reported. The weather firm forecasts the mostly dry pattern to continue for the next couple of days, allowing harvest to make more progress.

 

However, a wetter-than-normal pattern expands back across Mato Grosso once again during the six- to 10-day period, and this will keep any early harvest progress on the slow side, according to a Cropcast forecast.

 

Mato Grosso's harvest typically makes some reasonable progress by month's end, and a drier pattern during early March will be important to avert more serious harvest interruptions, Cropcast said.

 

 

Soy Products

  

Soymeal set new contract highs amid strong fund buying, traders said. Funds bought an estimated 1,500 soymeal and 2,500 soyoil.

 

Gains in soybeans and outside markets also boosted the products, a floor source added.

 

March soymeal set a new contract high of US$234.60 per short tonne on technical strength, topping the previous high of US$230.70. May soymeal hit a new contract high of US$240.50, exceeding the previous high of US$236.50.

 

Soymeal's gains came after early losses on ideas that previous advances were overdone, a trader noted.

 

In soymeal pit trades, Rand Financial bought 2,000 May, and Fimat bought 500 May. In soyoil pit trades, UBS bought 1,300 May and sold 400 March. Fimat spread 1,000 March/May soyoil.

 

In the January Census report, soyoil stocks are expected to increase modestly to 3.164 billion pounds in the January report, up from 3.065 billion the previous month, according to the survey of analysts. January soymeal stocks are seen declining to about 457,300 short tonnes, down from the 467,300 reported in December.