April 20, 2007

 

CBOT Soy Review on Thursday: Ends firmer in bounce from losses

 

 

Chicago Board of Trade soybean futures rose Thursday in a modest bounce from recent losses, analysts said.

 

May soybeans closed 2 3/4 cents higher at US$7.18 1/4, July soybeans ended up 2 3/4 cents at US$7.35, and November soybeans finished 2 1/2 cents higher at US$7.62. July soyoil closed up 49 points at 32.14 cents per pound, while July soymeal finished flat at US$203.20 per short tonne.

 

Soybeans suffered heavy declines earlier this week and were due for a rebound, analysts said. The market was in an oversold condition, a CBOT floor broker added.

 

"You've had a big break this week," said Tim Hannagan, analyst with Alaron. "It's more of a dead cat bounce."

 

Funds bought an estimated 3,000 contracts. In pit trades, UBS and USA Trading each bought 800 July. JP Morgan bought 400 July, and Rand Financial sold 400 July. Fortis spread 500 May/July, and Shatkin-Arbor spread 400 May/July.

 

Solid gains in the neighboring corn and wheat markets helped soybeans advance, traders said, although there are still fundamentally bearish ideas that delays in corn planting will lead to a bigger soybean crop. Forecasts for wet weather in the corn belt are negative for soybeans, floor traders said.

 

The first part of next week features rainfall re-developing in the Midwest, with moderate-to-high coverage west of the Mississippi, according to DTN Meteorlogix. Precipitation will total up to one inch Sunday, the weather firm predicted.

 

Rainfall chances will be greatest north of Interstate 80, in northern Iowa, northeastern Nebraska, the eastern Dakotas, and Minnesota, Meteorlogix said. The rain pattern will move eastward during next week, giving above-normal moisture to the Ohio Valley and the southern half of Illinois, the firm said.

 

"This renewed round of moisture will delay further field work and planting activity during the first half of next week," Meteorlogix said.

 

If forecasts for wet weather come true next week, participants will probably be back in the markets buying December corn and selling soybeans again, Hannagan said. There is the potential for another 15-20 cent decline in nearby contracts, he added.

 

"There isn't any kind of a drying period expected to surface now until after May 1," Hannagan said.

 

In other news, total U.S. weekly soybean export sales were 308,500 metric tonnes for the week ended April 12, the USDA reported Thursday. That was above the 150,000-200,000 tonnes forecast by analysts, although a commission house analyst noted the market usually doesn't trade off the exports report. Included in the sales were 25,000 tonnes for delivery in 2007-08 marketing year.

 

 

SOY PRODUCTS 

 

CBOT soy products closed mixed on fund buying and amid short-covering in soyoil, traders said. Overnight gains in palm oil futures also pushed soyoil higher, traders said.

 

Soyoil saw heavy profit-taking earlier this week after NOPA reported a higher-than-expected crush and larger-than-expected soyoil stocks, an analyst said. Thursday's gains were seen as a bit of a rebound from the declines, he said.

 

Soymeal was seen as a follower of soybeans and gave up earlier advances as soybeans trimmed gains late, they added. In soymeal trades, Tenco bought 1,200 July.

 

In soyoil trades, Bunge and Tenco each bought 700 July. July soyoil closed up 49 points at 32.14 cents per pound, while July soymeal finished flat at US$203.20 per short tonne.

 

Funds bought an estimated 4,000 soymeal contracts and 3,000 soyoil contracts.

 

Soymeal export sales were 117,400 metric tonnes, within the 75,000-125,000 tonnes expected, and soyoil sales were 900 metric tonnes, within the 0-5,000 metric tonnes expected.