April 16, 2008

 

CBOT Soy Review on Tuesday: Higher on technical, acres, outside markets

 

 

Chicago Board of Trade soybean futures finished firm Tuesday, continuing their pursuit of higher levels, buoyed by underlying fundamental strength, technical momentum and outside market influences.

 

May soybeans settled 7 1/2 cents higher at US$13.80 a bushel, July soybeans finished 7 3/4 cents higher at US$13.97 a bushel and November soybeans ended 13 cents higher at US$13.00 a bushel. July soymeal settled US$0.70 lower at US$353.60 per short tonne. July soyoil finished 102 points higher at 63.27 cents per pound.

 

Speculative-led buying fueled the advances, with broad-based buying across commodities keeping buyers enthusiastic, analysts said. There remains a sense of hesitancy on the part of sellers in the market, as the uncertainties of weather, 2008 acreage and old-crop supplies in the face of strong demand keep commodity futures attractive as an asset class, analysts said.

 

The emergence of record high crude oil prices and surging energy prices in general provided spillover support to underpin futures as well, a CBOT floor broker said.

 

Meanwhile, 2008 acreage is a key driver of prices, and with a large percentage of farmers still sitting on the fence over what to plant, soybeans have to rally with corn in order not to lose the hefty acre increases forecast in the prospective planting report, said Tim Hannagan, an analyst at Alaron Trading in Chicago.

 

Wet weather in the Midwest on the surface seems to imply higher soy acres, but with advances in seeding technology and still weeks remaining before planting delays would cause corn yield losses, soybeans must continue to fight for acres to offset corn's run to record high prices, Hannagan said.

 

Technical momentum remains a key influence attracting buyers, as the ability of futures to hold above major moving averages, as well as to continue to satisfy near-term upside chart objectives, serves as an impediment to downside movement, analysts said.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund-buying estimated at 2,000 lots.

 

 

SOY PRODUCTS

 

Soyoil futures ended Tuesday's session posting sharp gains once again, rallying to one-month highs. Spillover support from new record highs in crude oil, soaring energy prices and overnight strength in Asian vegoil markets combined to propel prices, analysts said. Solid underlying demand, technical momentum and bullish psychology filtering through the market served as catalysts to lift prices, they added.

 

Soymeal futures ended mixed, with nearby contracts drifting lower. The market pulled back from strong early gains as adjustments in the oil/meal spread attracted profit-taking in the absence of fresh supportive news, analysts said. The alignment of the spread was featured, with soyoil gaining product share on the energy aspect of the market, they said.

 

July oil share ended at 47.22% and the July crush ended at 77 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund-buying estimated at 2,000 lots.