March 17, 2007

 

CBOT Soy Review on Friday: Settles higher on speculative, technical buying

 

 

Chicago Board of Trade soybean futures ended higher Friday, supported by speculative and technical buying amid ideas recent declines were a bit overdone.

 

May soybeans ended 3 cents higher at US$7.53 1/2. May soymeal settled US$0.60 higher at US$218.00 per short tonne, while May soyoil ended 21 points higher at 30.77 cents a pound.

 

The market has given back a lot since making its highs in late February and it was overdue for a minor bounce, said a CBOT floor analyst.

 

Soybeans have good technical strength in their ability to hold major moving average support, with a lack any aggressive fund selling or liquidation pressure holding the market together, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

Futures held support near their respective 50-day moving averages in active contracts, and the inability of futures to attract aggressive selling once private acreage estimates failed to provide a bullish spark uncovered further buying interest, analysts added.

 

The private acreage estimates were a non-event, with soybeans remaining the last bastion for market bulls in the CBOT ag complex, Kleist said. Corn futures have absorbed long liquidation, and wheat has experience fresh speculative sales in the last two weeks, while the funds have not liquidated soybean length, but have defended major moving-average support, Kleist added.

 

Pre-weekend short covering aided the supportive tonnee, with lingering fears of 2007 acres being smaller than recent estimates adding underlying strength. However, traders are seen continuing to take a cautious approach to the market heading toward the March 30 prospective plantings report, analysts said.

 

Private analytical firm Informa Economics estimated 2007-08 U.S. planted soybean acreage at 70.384 million acres, down from the 70.878 million acres it estimated in January. The Iowa Grain Co. estimated 2007-08 U.S. planted soybean acreage at 70.4 million acres.

 

U.S. Department of Agriculture at its recent Outlook Forum estimated 2007-08 planted soybean planted acreage at 70.5 million acres. 2006 U.S. soybean acreage was measured at 75.522 million.

 

In pit trades, speculative fund buying was estimated at 2,000 lots. UBS Securities bought 1,000 May, Calyon Financial and Fimat each bought 500 May, and Tenco bought 400 November. Man Financial and Rand Financial each sold 500 May, and Tenco sold 500 July, with Calyon Financial and RJ O'Brien each selling 300 May.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board Friday, rebounding from earlier declines. The market followed the lead of soybeans, finding support from light speculative fund buying, traders said. Soyoil futures rallied to two-week highs, buoyed by technical buying amid active contracts' ability to hold support above major moving averages, traders said. Soymeal futures were supported by strength in the rest of the complex, while soyoil/soymeal spreading limited meals upside potential, analysts added.

 

May oil share ended at 41.37% and the May crush ended at 64 1/2 cents.

 

In soymeal trades, buyers and sellers scattered among various commission houses, with Bunge Chicago buying 300 May and UBS Securities sold 300 July. Speculative fund buying was estimated at 1,500 contracts.

 

In soyoil trades, Citigroup and UBS Securities each bought 500 May, Fortis and Shatkin/Arbor each bought 400 May. Fimat sold 700 May, Citigroup sold 500 May, and ADM Investor Services sold 300 May, with Bunge Chicago and JP Morgan each sellers of 400 May. Speculative fund buying was estimated at 2,500 lots while commercial selling was estimated at 2,000 lots.