February 23, 2007

 

CBOT Soy Review on Thursday: New contract highs on fund, speculative buying

 

 

Chicago Board of Trade soybean futures Thursday advanced to new contract highs on fund and speculative buying, with the November contract trading at its highest level since 1988, sources said.

 

Profit-taking trimmed gains before the close, traders added.

 

March soybeans finished 2 1/2 cents higher at US$7.83 3/4, and May soybeans ended 2 1/2 cents higher at US$8.00 1/2. November soybeans ended up 5 3/4 cents at US$8.37 3/4.

 

March soyoil closed 20 points higher at 30.32 cents per pound, while March soymeal closed US$0.10 higher at US$231.40 per short tonne.

 

March soybeans set a new contract high of US$7.91 per bushel, exceeding the previous high of US$7.88 1/4, reached on the screen Wednesday. May soybeans traded electronically at a new contract high of US$8.07 3/4, exceeding the previous high of US$8.04 3/4.

 

Funds were active and bought an estimated 2,500 contracts amid continued speculative interest in commodities, a CBOT floor source said.

 

Funds are "going to buy so much every day, and they're going to keep buying and buying," said Tim Hannagan, analyst with Alaron.

 

Soybeans also have upside technical momentum after setting new contract highs for several trading sessions in a row, sources added.

 

There are expectations that U.S. farmers will plant notably fewer soybean acres this spring as they turn to corn to take advantage of increased interest in ethanol, sources said. That idea remains supportive to prices as soybeans try to win back some of the acres, they noted.

 

"The soybean market is clearly on a ride that's anticipatory in nature, given the clear signal that soybeans will be losing acreage to corn," said Greg Wagner, analyst with Horizon Ag Strategies.

 

There also was some underlying fundamental support for prices from the U.S. Census Bureau's monthly soybean crush report, analysts said. U.S. soybean crush for January was 156.9 million bushels, above the average analyst guess of 155.9 million.

 

In pit trades, Rand Financial bought 800 May and sold 400 March. UBS bought 500 May and Tenco bought 400 May.

 

ADM spread 1,500 May/March. RJ O'Brien spread 800 July/March, and Man Financial spread 700 July/March. Man Financial and ABN Amro each spread 500 March/May.

 

The U.S. Department of Agriculture on Friday is due to release export sales for the week ended Feb. 15. Analysts surveyed by Dow Jones Newswires predicted soybean sales would be 300,000 to 600,000 metric tonnes.

 

In other news, a roughly two-mile backup into the Paranagua Port in south Brazil ended Thursday as private terminal operators made room for genetically modified soybeans.

 

The four-day traffic jam was caused by an abundance of truck shipments of transgenic soy to export terminals that did not have space in terminal warehouses to store the beans, nor had ships waiting to load them.

 

 

SOY PRODUCTS

 

CBOT soy product futures finished higher with support from fund buying, floor sources said. Funds bought an estimated 3,000 soymeal and 1,500 soyoil.

 

Firmer crude oil futures provided spillover strength to soyoil, traders said. In soyoil pit trades, JP Morgan bought 400 May and spread 500 May/March. Goldenberg Hehmeyer sold 500 March.

 

Soybeans lent strength to soymeal, although there are ideas soymeal is overdone after setting contract highs recently, a source said.

 

In soymeal pit trades, Tenco bought 1,000 December, while Fimat and Rosenthal each bought 500 May. RJ O'Brien bought 400 May. ADM spread 1,500 May/March, and Fortis spread 1,000 May/July.

 

Analysts expect soymeal export sales to be 75,000 to 150,000 tonnes and soyoil export sales to be nothing to 10,000 tonnes.