March 27, 2008

 

CBOT Soy Review on Wednesday: Rally on demand outlooks, inflationary buys

 

 

Chicago Board of Trade soybean futures ended sharply higher Wednesday, continuing their upward surge on speculative-led buying amid bullish demand outlooks and inflationary based buying, analysts said.

 

May soybeans settled 45 cents higher at US$13.52, July soybeans finished 43 1/2 cents higher at US$13.65 1/2 and November soybeans ended 5 1/2 cents higher at US$12.44 1/2. May soymeal settled US$5.20 higher at US$355.50 per short tonne. May soyoil finished 2 points lower at 57.75 cents per pound.

 

Soybean prices were buoyed by a lingering farmers strike in Argentina, as traders dial in the impact of increased U.S. soybean demand on already-tight U.S. old-crop inventories, as buyers shift purchases from Argentina to the U.S. or other suppliers, analysts said.

 

The impact of the ongoing farmers strike in Argentina has surfaced on U.S. shores, as world importers scramble to shift demand to the U.S., said Greg Wagner, analyst with AgResource Company in Chicago.

 

Speculative-led buying was a key driver of prices, with weakness in the U.S. dollar, and strength in outside inflationary markets helping extend the recent trend of speculative money flowing back into the market, analysts said.

 

Last week, the market had decoupled from its fundamentals, plummeting on outside financial market turmoil, said Wagner. However, stability in outside markets and new demand potential is allowing futures to rebound in an attempt to ration demand domestically, he added.

 

The market flirted with its 50-cent daily upper trading limits during the day, but profit taking managed to slow its ascent at the highs, analysts added.

 

On tap Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Trade estimates put soybean export sales at 300,000 to 700,000 metric tonnes. Soymeal sales are projected in a range of 100,000 to 150,000 metric tonnes, with soy oil sales expected in a 10,000- to 20,000-tonne range.

 

U.S. soybean crush for February is expected to be 146.1 million bushels in the U.S. Census Bureau's monthly report, down from the January crush figure of 160.3 million bushels, according to a survey of analysts. The Census Bureau's crush report is scheduled for release Thursday at 8 a.m. EDT (1200 GMT). February soymeal stocks are seen increasing to 305,000 short tonnes, up from the 294,667 tonnes reported for January. Soyoil stocks are seen declining to 2.975 billion pounds in the report, down from 3.071 billion the previous month.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated between 4,000 and 6,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal futures rising at the expense of soyoil futures, analysts said. Soymeal continued its recent trend of recapturing product share, benefiting from talk of increased demand amid Argentina strike problems, and the realignment of the product spread relationship, analysts added.

 

Soyoil futures experienced a volatile session, finishing lower after an initial rise to their 200-point upper daily trading limit, traders said. Talk of the potential for increased Chinese demand for Malaysian palm oil as result of the Argentine strike amid its closer proximity and price weighed on futures as well, a CBOT floor broker said.

 

May oil share ended at 44.82% 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 3,000 lots.

 

In soyoil trades, ADM Investor Services bought 400 July, Iowa Grain bought 400 May, and Newedge bought 700 May. Tenco sold 900 July.