April 3, 2007

 

CBOT Soy Review on Monday: Rallies; retraces Friday losses on speculative buys

 

 

Chicago Board of Trade soybean futures ended higher Monday, retracing Friday's declines on corrective speculative buying, analysts said.

 

May soybeans ended 17 3/4 cents higher at US$7.79, and November soybeans finished 16 1/4 cents higher at US$8.21 1/4. May soymeal settled US$6.50 higher at US$218.30 per short tonne. May soyoil ended 28 points higher at 32.76 cents a pound.

 

The market was able to right itself from Friday's sharp declines, as the ability of corn futures to trade off its limit-down levels gave buyers confidence to return prices to higher levels, said Vic Lespinasse, commission house analyst with A.G. Edwards and Sons in Chicago.

 

Soybeans did what they were prevented from doing Friday, based off the U.S. Department of Agriculture's planting report, Lespinasse added.

 

The market had been pressured by spillover weakness from corn, but once corn was pulled off its lows, speculative buyers surfaced to push soybeans into buy stop orders, traders said.

 

The market briefly soared to over one-month highs, buoyed by speculative and technical buying amid bullish underlying fundamental outlooks of tightening supplies in the 2007-08 marketing year, analysts said.

 

The market has done its job of buying more corn acres for 2007, but it now has to address the longer range bullish outlook for soybeans amid rising global oilseed demand, analysts added.

 

The upward theme was consistent after midday, but a lack of follow-through buying at the highs, concerns the rally in soybeans and the potential for a wet Midwest spring could attract additional soybeans acres, tempered upside movement, analysts added.

 

Meanwhile, news of China's intention to buy U.S. soybeans in May provided underlying support as futures had little other supportive news to provide direction. China drafted a plan to purchase US$12.5 billion worth of goods from the U.S. in May, a person familiar with the plan said Monday. The plan includes purchases of US$2 billion of soybeans.

 

The USDA reported 18.563 million bushels of soybeans were inspected for export in the week ended March 29. The export figure is down 5.2% from the previous week's 19.572 million bushels. Analysts surveyed by Dow Jones Newswires projected the inspections to fall within a range of 25 million to 30 million bushels. Accumulated soy inspections total 857.777 million bushels, up 20.5% from the 711.696 million bushels reported at the same time last year.

 

In other news, Brazil should harvest 58.6 million metric tonnes of soybeans in the 2006-07 crop, local agribusiness consultancy Celeres said Monday. The number is 1% higher than the firm's last estimate, released in early March.

 

Brazil's Parana state raised its 2006-07 soy crop estimate to 11.9 million metric tonnes from the 11.8 million estimated last month, the state's Secretary of Agriculture said Monday. Parana is the No. 2 soy-producing state in Brazil.

 

In pit trades, Calyon Financial and Man Financial each bought 500 May contracts, UBS Securities bought 400 May, and Iowa Grain bought 400 July. Sellers were widely scattered among various commission houses.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, buoyed by corrective buys in unison with price strength in soybeans. Soyoil futures rallied to new contract highs, finding support from rekindled speculative buying amid a reduction of spillover pressure from neighboring corn futures, analysts say.

 

The ability of May futures to pierce through double-top resistance at the 33.00-cents-per-pound level uncovered pre placed buy orders to lift prices to their highs, traders said. However, the inability to attract additional buying at the highs coupled with late selling in soybeans trimmed advances down the stretch, traders added.

 

Soymeal futures ended Monday's session posting solid gains, buoyed by speculative and technical buying amid spillover strength from the rest of the soy complex, analysts said.

 

May oil share ended at 42.87% and the May crush ended at 61 1/2 cents.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, JP Morgan a seller of 700 May, and Fimat a seller of 300 May.

 

In soymeal trades, Rand Financial bought 500 December. Fimat and UBS Securities each sold 500 July, and Iowa Grain sold 400 May.