April 10, 2008

 

CBOT Soy Review on Wednesday: Rally; broad-based buys, strike talk

 

 

Chicago Board of Trade soybean futures finished Wednesday's day session sharply higher, soaring to two-week highs on broad-based commodity buying, underlying demand and talk of the Argentina farmers strike heating up again.

 

May soybeans settled 61 1/2 cents higher at US$13.13, July soybeans finished 61 1/4 cents higher at US$13.30 and November soybeans ended 38 1/2 cents higher at US$12.44. May soymeal settled US$19.80 higher at US$349.60 per short tonne. May soyoil finished 223 points higher at 58.07 cents per pound.

 

The combination of weakness in the U.S. dollar, record high crude oil futures in conjunction with talk of Argentina farm groups looking to possibly go back on strike, provided market bulls with ammunition to briefly shoot prices to their 70 cent exchange imposed upper daily trading limits, analysts said.

 

Technically inspired buying was featured as well, with advances accelerating once overhead resistance was penetrated, analysts added.

 

The market discounted increased domestic and world ending stock estimates from the U.S. Department of Agriculture. The upwardly revised stocks numbers were largely anticipated, with a higher export and crush estimate providing a fundamental boost to the market's bullish psychology, said Greg Wagner, analyst with AgResource Co. in Chicago.

 

The higher demand forecasts show the market has not been fundamentally relieved of supply issues despite the higher carryout projections, he added.

 

Spillover support from corn and soaring soy product values supplied additional strength to keep speculative buyers enthused, traders said. However, futures did back off their intraday highs, succumbing to profit taking pressure down the stretch, traders added.

 

Looking ahead, traders anticipate volatile price action to continue, with technical traders targeting a 50% retracement from the market's plunge from record highs to last weeks lows near the US$13.47 level basis May futures.

 

On tap for 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 200,000 to 600,000 metric tonnes. Soymeal sales are projected in a range of 75,000 to 175,000 metric tonnes, with soy oil sales expected in a 10,000- to 30,000-tonne range.

 

In pit trades, buyers and sellers were scattered among buyers and sellers, with speculative funds estimated buyers of 6,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures rallied in step with soybeans, briefly climbing to their respective upper daily trading limits. Soyoil futures were buoyed by soaring crude oil futures, a supportive reduction in USDA ending stock forecasts, and bullish demand outlooks, analysts said. Soymeal futures were energized by a combination of broad-based commodity buying, spillover from soybeans and technical momentum, traders said. Strong underlying demand prospects served as a catalyst to aide the advances as well, traders said.

 

May oil share ended at 45.37% and the May crush ended at 95 cents.

 

In soymeal trades, buyers and sellers were scattered among buyers and sellers, with speculative funds estimated buyers of 3,000 lots.

 

In soyoil trades, buyers and sellers were scattered among buyers and sellers, with speculative funds estimated buyers of 6,000 lots.