February 27, 2008

 

CBOT Soy Review on Tuesday: Rallies, new highs set on broad base buys

 

 

Chicago Board of Trade soybean futures ended Tuesday's session posting strong gains, rebounding from early losses on speculative buying and broad based commodity strength.

 

March soybeans ended 14 3/4 cents higher at US$14.66 3/4, May soybeans settled 15 cents higher at US$14.84 1/4, July soybeans finished 12 cents higher at US$14.97 1/2 and November soybeans ended 10 cents higher at US$14.27. May soymeal settled US$4.70 higher at US$379.20 per short tonne. May soyoil finished 70 points higher at 65.03 cents per pound.

 

The market had a strong performance Tuesday, carving out new all-time highs.

 

Futures managed to reverse early profit taking losses on speculative buys as fresh money flowed into the market amid spillover from limit up wheat and strength in outside inflationary markets, analysts said.

 

Solid commercial buying aided the higher tonnee, as a market facing a tight supply situation continues to attract commercial buying on price breaks, said Darrin Newsom, senior analyst with DTN in Omaha, Neb.

 

The connection between soybeans and energies aided the gains as well, with crude oil moving above the US$100 a barrel mark and a tight supply scenario serving as catalysts to keep participants cautious sellers, analysts added.

 

Sellers remain nervous despite prices at all-time highs, as outlooks for bullish supply and demand and acreage reports to be released in March continuing to point to long range support in the market, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

New money is flowing into the market and with inflationary fears, commodities remain an attractive asset class to investors, a CBOT floor analyst said. Weakness in the U.S. dollar is keeping U.S. products competitive, with end users rushing to cover needs on any break in prices, he added.

 

Meanwhile, the production shortfall forecast for soyoil and soybeans in 2007-08 is the main driver for the recent record high prices of vegetable oils, Thomas Mielke, executive director of ISTA Mielke GmbH, publisher of Oil World, said Tuesday. Global soybean output is expected to fall short of demand by around 20 million metric tonnes in 2007-08, Mielke told Dow Jones Newswires in an interview on sidelines of an annual conference in Malaysia on vegetable oils.

 

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

 

 

SOY PRODUCTS

 

Soy product futures ended higher, with soyoil setting new all-time highs once again. Soyoil futures charged to uncharted territory, rebounding from early losses on a combination of commercial and speculative buying, analysts said. Spillover strength from a rally in crude oil futures, inflationary buying tied to weakness in the U.S. dollar as well as strong underlying demand for world vegoils served as the catalyst to rekindle bullish enthusiasm, analysts added. Tightening global vegoil inventories combined with a strong demand base continue to keep sellers on the run, a trader added.

 

Soymeal futures ended higher, rallying on broad based strength seen in most commodities with technically related buying aiding the gains as well, analyst say. However, the market failed to challenge contract highs, as late oil/meal spreading limited advances, traders said.

 

March oil share ended at 46.40% and the May crush ended at 65 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.

 

In soyoil trades, JP Morgan bought 300 May, 300 September and 600 December, and sold 300 May, Newedge USA sold 500 July. Commercial buying was estimated at 1,000 lots and speculative fund buying was estimated at 4,000 lots.