March 29, 2007

 

CBOT Soy Review on Wednesday: Settles up on speculative buys; soyoil strength

 

 

Chicago Board of Trade soybean futures rallied Wednesday, propelled by fund-related buying related to bullish acreage speculation and spillover strength from soyoil.

 

May soybeans ended 13 3/4 cents higher at US$7.70 3/4, and November soybeans finished 13 1/2 cents higher at US$8.13 1/4. May soymeal settled US$4.10 higher at US$218.30 per short tonne, while May soyoil ended 60 points higher at 32.41 cents a pound.

 

Fund buying came back in Wednesday, returning after recent profit-taking setbacks amid bullish perceptions for Friday's planting intentions report, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Aside from acreage outlooks, the market received supportive influence from new contract highs set in soyoil amid rallies in crude oil, and technically related price strength, analysts said.

 

After month- and quarter-end profit-taking ran their courses during past sessions, the market returned its focus to Friday's reports, and Wednesday's price action was reflective of market perceptions of the report, Hannagan said. This made room for funds to return, with a lack of selling providing bulls with confidence that everyone is on the same page in regards to soybean acres, he added.

 

Technical factors added to the gains, with active contracts satisfying near-term technical objectives of filling charts gaps left from Monday, traders said. The market's gains accelerated once new highs were established for the week, with pre-placed buy stops triggered above Monday's highs.

 

The U.S. Department of Agriculture is scheduled to release its prospective plantings and quarterly grain stocks reports Friday at 7:30 a.m. CDT (1230 GMT). The average estimate of 22 analysts surveyed by Dow Jones Newswires projects 2007 U.S. planting intentions at 69.167 million acres. The estimates ranged from 65.927 million to 70.800 million acres. In a survey of 14 analysts, the average estimate for quarterly grain stocks was 1.801 billion bushels from a range of estimates from 1.765 billion to 1.830 billion.

 

In pit trades, buyers and sellers were scattered among various commission houses. UBS Securities, Man Financial, Rand Financial, Calyon Financial, Fimat and ADM Investor Services were featured buyers. Rand Financial was a late buyer of 800 May and Calyon Financial bought 300 May in late dealings, traders said. Speculative fund buying was estimated near 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board.

 

Soyoil was the upside leader of the products, with active contracts racing to new contract highs. The market was influenced throughout the day by its bullish biodiesel relationship with higher crude oil futures, analysts said. The funds continue to display a willingness to be long soyoil versus soymeal amid supportive expectations for biodiesel, Hannagan said. Soyoil is the key feedstock for biodiesel production in the U.S.

 

Soymeal futures traded higher in unison with the rest of the soy complex. Speculative-led buying emerged to pull soymeal along for the ride, with gains accelerating as active contracts challenged overhead resistance at Monday's highs down the stretch, a CBOT floor analyst said.

 

May oil share ended at 42.61% and the May crush ended at 64 1/4 cents.

 

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

 

In soyoil trades, speculative fund buying was estimated near 4,000 lots. JP Morgan bought 700 May, Fimat bought 200 May and 400 July, with Rand Financial a buyer of 400 May. Sellers were scattered among various commission houses.