March 25, 2008

 

CBOT Soy Review on Monday: Soar to 50cent limit; oversold, fundamentals

 

 

Chicago Board of Trade soybean futures ended sharply higher Monday, soaring on a recovery bounce from previous losses amid oversold conditions and supportive underlying fundamental features.

 

May soybeans settled 50 cents higher at US$12.57, July soybeans finished 50 cents higher at US$12.72 and November soybeans ended 49 cents higher at US$11.89. May soymeal settled US$20.00 higher at US$330.30 per short tonne. May soyoil finished 137 points higher at 55.77 cents per pound.

 

May soybeans were synthetically trading between US$12.84 and US$12.86 on the close, traders said.

 

The market was technically oversold heading into Monday's session, with an over-US$3.00-a-bushel drop in price since the beginning of the month leaving futures overdone on the downside, analysts said.

 

Stability in outside financial markets and the ability of Asian futures to find support overnight gave buyers confidence to return from the sidelines, analysts added. Traders have begun to focus attention back on the bullish fundamentals of the market in the absence the speculative liquidation seen last week, analysts add.

 

Speculative short covering was featured, with ideas the anticipated increase in 2008 U.S. soybean plantings will not replenish stocks to comfortable levels in the face of strong demand serving as underpinning support, a CBOT floor broker said.

 

Meanwhile, commercial buying aided the gains also, with rumors of China switching some previously purchased soybeans from Argentina to U.S. origin providing bullish optimism as well, the broker added.

 

Looking forward, the market is poised to shift its attention to new-crop fundamentals, and with tight old-crop inventories leaving little room for error in new crop plantings and production, futures are poised to remain underpinned heading into the planting season, analysts said.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures soared higher, in step with broad-based gains seen throughout the CBOT grain complex. Soymeal futures rallied with nearby contracts soaring to their upper daily trading limits of US$20 per short tonne. The combination of spreading between the products, technical buying and spillover from other feed gains served as the catalyst to lift futures, analysts said.

 

Soyoil futures rallied in unison with the rest of the complex, but advances were limited by meal/oil spreading, analysts said. However, talk of India trimming import duties on soyoil in line with a similar reduction to palm oil last week supported prices, analysts added.

 

May oil share ended at 45.81% and the May crush ended at 83 cents.

 

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

 

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