March 8, 2007

 

CBOT Soy Review on Wednesday: Fund buying supports amid crude oil gains

 

 

Chicago Board of Trade soybean futures closed higher Wednesday amid fund buying and gains in crude oil futures, traders and analysts said.

 

May soybeans finished up 9 1/2 cents at US$7.57 1/4, and November soybeans closed 8 3/4 cents higher at US$7.95 1/4 a bushel. It was the highest close for both contracts since March 1.

 

May soymeal closed US$2.90 higher at US$222.60 per short tonne, and May soyoil finished up 36 points at 30.21 cents per pound.

 

Soybean futures were lower in overnight electronic trading, but strong follow-through buying did not show up in the day session, traders said. That opened the door for speculative and end-user buying, they noted.

 

Funds drove prices higher by buying an estimated 6,000 contracts.

 

In pit trades, ABN Amro bought 3,500 May and spread 500 November/May. ADM bought 1,000 May. Tenco bought 300 May and spread 400 March/May. Kottke bought 300 November, while Rand Financial and JP Morgan each sold 300 July.

 

Advances in crude oil inspired buying in soybeans and soyoil, said Joe Victor, vice president of marketing at Allendale Inc.

 

"Just at the time when the trade was convinced that grains and oilseeds were trying to detach themselves from energy and stock market fluctuations, lo and behold crude takes off and soybeans follow along with it," Victor said.

 

Traders noted the soybean market was due for a rebound after closing lower for four consecutive day sessions. There also was some position squaring ahead of the release of the U.S. Department of Agriculture's supply and demand report, due at 8:30 a.m. EST (1330 GMT) Friday, they said.

 

The USDA is expected to lower its U.S. soybean ending stocks estimate in the report because of a strong export and crush pace, analysts said. A Dow Jones Newswires survey of 15 analysts showed the average estimate for U.S. soybean ending stocks was 589 million bushels, down slightly from the USDA's February estimate of 595 million bushels.

 

The report also could include larger estimates for South American soybean production based on favorable growing conditions and early reports of high yields, analysts said.

 

There was little other fresh news to push prices higher, analysts said.

 

South America's crop weather conditions continue to be favorable for the various late-season stages of the soybean crop, according to DTN Meteorlogix. That is bearish for the market, an analyst said.

 

In northern Brazil, Mato Grosso will have mostly dry and hot weather during the remainder of this week, with temperatures reaching close to 100 degrees Fahrenheit, the weather firm reported. This is a favorable weather pattern for harvest progress, Meteorlogix said.

 

Southern Brazil will have scattered rain showers. Temperatures will be warm to hot, but recent rains have provided a good soil moisture reserve, the firm said.

 

Brazil's market year 2007-08 soy crush remains at 28.8 million metric tonnes, the Brazilian Vegetable Oils Industry Association, or Abiove, said Wednesday.

 

Abiove also maintained its expectations for the 2006-07 soy crop at 57.1 million tonnes. Exports remain at 25.5 million tonnes, as well. The number would be a record for Brazil's soy trade.

 

 

SOY PRODUCTS

 

Gains in crude oil spilled over into soyoil and the whole soy complex, an analyst said. Fund buying also pushed prices higher. Funds bought an estimated 1,000 soymeal and 3,000 soyoil contracts.

 

In soyoil pit trades, ADM bought 700 May, while Bunge, Shatkin Arbor and UBS each bought 300 May. JP Morgan bought 500 May and sold 500 May. Citirgoup also sold 500 May, and Rand Financial sold 500 July.

 

In soymeal trades, Fimat bought 300 May soymeal and sold 300 May.