April 11, 2008

 

CBOT Soy Review on Thursday: Soar on technical buying, demand, acreage battle

 

 

Chicago Board of Trade soybean futures finished sharply higher Thursday, continuing the recent uptrend on the back of technical buying, solid underlying demand and an attempt to hold onto acreage.

 

May soybeans settled 43 cents higher at US$13.56, July soybeans finished 42 3/4 cents higher at US$13.72 3/4 and November soybeans ended 27 cents higher at US$12.71. May soymeal settled US$2.60 higher at US$352.20 per short tonne. May soyoil finished 210 points higher at 60.17 cents per pound.

 

Old-crop contracts were the upside leader, with the market seeing much better export business, reflected by solid weekly export sales, said Brian Hoops, president of Midwest Market Solutions.

 

Demand is being aided by strike issues in Argentina and Brazil, he added.

 

Technically inspired buying was featured, with the ability of futures to break a steep downtrend line on technical charts generating short covering and fresh speculative buys, analysts said. The market also satisfied a near-term technical objective of climbing above the 50% retracement level from the market's plunge from record highs to last week's lows near the US$13.47 level basis May futures, analysts added.

 

New-crop contracts posted strong gains, but lagged advances in nearby futures.

 

Fears arising from thoughts the lofty March 31 acreage forecast would be trimmed by 2 million to 3 million acres amid corn's recovery versus beans after the report kept buyers in deferred contract months, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

A lot of farmers were not fully committed to planting intentions as of March 1, so the soybean market has to push prices high enough to ensure that a significant amount of acres don't get switched to corn, he added.

 

In pit trades, buyers and sellers were scattered among commission houses, with speculative funds estimated buyers of 5,000 lots.

 

 

SOY PRODUCTS  

 

Soy product futures rallied in step with soybeans, buoyed by technical momentum and strong underlying demand.

 

Soyoil futures briefly rallied to their 250-point exchange-imposed daily trading limits before pulling back on profit-taking, traders said.

 

The combination of strong underlying demand and technical momentum kept futures underpinned, analysts said.

 

Futures also benefited ideas the market has to advance prices in an effort to secure stocks for food versus fuel, as some analysts said the recent rally in energies and prior drop in soyoil brought biodiesel margins closer to profitability.

 

Soymeal futures climbed with the rest of the complex on technical buying and demand tied to ideas a lack of movement of South American supplies is making U.S. soymeal an attractive offer, analysts said.

 

May oil share ended at 46.07% and the May crush ended at 80 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among commission houses, with speculative funds estimated buyers of 2,000 lots.

 

In soyoil trades, buyers and sellers were also scattered among commission houses, with speculative funds estimated buyers of 5,000 lots.