April 18, 2006

 

CBOT Soy Review on Monday: Firm on outside market support

 

 

Chicago Board of Trade soybean futures rallied to two-week highs Monday, extending Thursday gains, as broad-based strength in outside commodity markets attracted speculative buying and short covering.

 

May soybeans finished 8 1/2 cents higher at US$5.71 1/2, July soybeans ended 8 cents higher at US$5.85 1/2, July soymeal settled US$3.30 higher at US$178.40 a short tonne, and July soyoil ended 14 points higher at 23.13 cent a pound.

 

The combination of Thursday's close near last week's highs, multi-decade highs in outside precious metals markets, increased shorts reported in the market and a good crush figure provided support to lift prices, with technical considerations aiding the gains as well, said John Kleist of Kleist Agricultural Consulting.

 

The supportive theme was consistent from the outset, but with the overall bearish fundamental makeup of the market and the inability of futures to challenge any significant overhead resistance, traders say the bearish dynamics of the market have not changed.

 

The gains were more of a pressure-valve release of technical pressure in a bear market, as speculative shorts have found it tough to eek out profits on the downside after committing to the short side, added Kleist.

 

Meanwhile, uncertainty over the size of Brazil's soy crop amid talk of harvest delays and the eventual size of U.S. plantings managed to generate light support to encourage some short covering, traders add.

 

Ahead of the open, the National Oilseed Processors Association said its members crushed 142.852 million bushels of soybeans in March. The average of analysts' estimates pegged the crush at 140.6 million bushels. Soyoil stocks were reported at 2.393 billion pounds compared to the average guess of 2.403 billion. The soyoil yield was 11.76 pounds per bushel, up from 11.73 last month.

 

Friday, the Commodity Futures Trading Commission said in its commitments of traders report that large speculative traders held net short futures and options positions totaling 55,941 lots in soybeans as April 11, up from 51,850 lots last week.

 

The DTN Meteorlogix weather forecast said in South America's soybean areas, rainfall of up to one-half inch during the holiday weekend in most of Brazil will inhibit harvest progress to start this week. Additional showers are headed for all but far-southern areas of Brazil through Wednesday (Rio Grande do Sul to be mostly dry). Argentina will be drier this week, but harvest progress will be slow because of the weekend showers, Meteorlogix added.

 

In pit trades, ABN Amro bought 1,000 May and 1,000 July, Calyon Financial and Rand Financial each bought 1,000 July, Citigroup and JP Morgan each bought 500 July. Commodity funds were estimated buyers of near 5,000 contracts.

 

On the sell side, Rand Financial sold 500 May, Term Commodities sold 400 July, RJ O'Brien and Tenco each sold 300 July. South American soybean futures ended higher, in tune U.S. soybean futures. The May future finished 10 cents higher at US$5.99.

 

 

SOY PRODUCTS

 

Soymeal futures ended higher across the board, in step with soybeans, buoyed by speculative short covering and technically based buying. The strength of soybeans kick-started the gains, with the ability of the nearby future to climb above resistance at its 50-day moving average providing more of a supportive argument to attract buying, analyst said.

 

Soyoil futures ended higher along with the rest of the complex, but its advances lagged behind the gains in soybeans and soymeal. The inability of the market to push above last week's highs, abundant nearby supplies with a large soyoil yield reported in the NOPA crush report applied pressure to allow soymeal to gain product share, analysts said.

 

July oil share ended lower at 39.33%, and the July crush was at 61 1/2 cents.

 

In soymeal trades, ADM Investor Services bought 300 May, ABN Amro bought 1,500 May and 800 July, Iowa Grain bought 2,000 May, Man Financial bought 600 May, JP Morgan bought 500 May. Commodity fund buying was pegged near 5,000 lots. Prudential Financial sold 400 July and JP Morgan sold 300 May and 300 July

 

In soyoil trades, buying was scattered among various commission houses. Rand Financial was a seller of 600 July and Bunge Chicago was reported selling 200 July. Commodity funds were net buyers on the day.