April 12, 2007

 

CBOT Soy Review on Wednesday: Settles up on corn/soy spread unwinding

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, stabilizing from prior losses on the unwinding of corn/soybean spreads, analysts said.

 

May soybeans ended 4 cents higher at US$7.46 1/2, July soybeans settled 3 1/2 cents higher at US$7.64, and November soybeans finished 4 1/4 cents higher at US$7.91 3/4. May soymeal settled US$0.30 higher at US$205.10 per short tonne. May soyoil ended 32 points higher at 32.78 cents a pound.

 

Weather forecasts pointing toward drier conditions in the western Midwest next week sparked ideas that fewer corn acres may be shifted to soybeans with farmers potentially returning to the fields next week, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

The theme was consistent throughout, with consolidative trade featured in relatively quiet action. Futures staged a mild correction from recent setbacks, with bargain-hunting buying and technical buys amid underlying strength at the lower end of the market's month long trading range helping underpin prices as well, analysts say.

 

The DTN Meteorlogix forecast calls for the snow to move eastward through the remainder of the northern Midwest on Wednesday, with totals of up to nine inches in southern Minnesota, northern Iowa, Wisconsin and northern Illinois. Elsewhere in the Midwest, rain showers will bring up to an additional half inch of precipitation. A second weather system will move across the Midwest during the weekend and will produce up to one inch of rainfall. Temperatures will remain below to much-below normal; thus, no field work is likely to be done in the Midwest before next week. An unsettled weather pattern remains in the forecast for the central U.S. during next week, in addition to the wet and cool weather this week.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release weekly export sales figures for the week ended April 5 at 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires estimated soybean sales would range from 200,000 to 400,000 metric tonnes. Soymeal commitments were estimated in a range of 50,000 to 125,000 tonnes and soyoil sales were estimated in a range of zero to 10,000 tonnes.

 

In pit trades, JP Morgan bought 600 May, Fimat bought 1,000 May, Penson GHC bought 700 May, Iowa Grain and UBS Securities each bought 500 July. Sellers were lightly scattered, with Shatkin/Arbor a seller of 600 May and UBS Securities selling 300 May. Speculative fund buying was estimated between 4,000 and 5,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, with soyoil futures continuing to gain product share versus soymeal. Soyoil futures charged higher, buoyed by speculative buying. The market continues to feed off bullish fundamentals for world vegetable oils markets amid rising global demand for biodiesel, analysts say. An overnight rally to 8 1/2 year highs in Malaysian palm oil futures and strength in crude oil futures helped support price strength as well, analysts added.

 

Soymeal futures ended higher, bouncing back from earlier weakness on end of the day position-evening, traders said. The market was pressured by soyoil/soymeal spreading over the course of the day, with increased domestic and export competition for soymeal weighing on prices as well, analysts added.

 

May oil share ended at 44.42% and the May crush ended at 65 1/4 cents.

 

In soyoil trades, Bunge Chicago bought 600 May, JP Morgan bought 500 May and 400 July, Tenco bought 300 July, and Rosenthal bought 300 May. Fimat sold 700 May, and Citigroup and UBS Securities each sold 300 May. Speculative fund buying was estimated near 3,000 contracts.

 

In soymeal trades, Bunge Chicago and Man Financial each bought 500 May, ADM Investor Services bought 300 July and JP Morgan bought 300 December. Fimat sold 300 May, Man Financial sold 400 May. Speculative fund selling was estimated near 3,000 contracts.