April 26, 2007

 

CBOT Soy Review on Wednesday: Higher on speculative buys, spillover from grains

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, buoyed by speculative buying amid spillover strength from soaring corn and wheat futures.

 

July soybeans settled 11 1/2 cents higher at US$7.37 3/4, and November soybeans finished 11 1/4 cents higher at US$7.64 1/2. July soymeal settled US$1.60 higher at US$198.30 per short tonne. July soyoil ended 83 points higher at 33.26 cents a pound.

 

The soybean market took on a me too mentality, with limit up moves in corn and wheat attracting speculative fund buying, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

Technically motivated buying added to the price gains, with ideas the market's downside moves had exhausted near term selling interest amid oversold market conditions attracted buyers as well, traders said.

 

The inability of active futures to penetrate support at the top of chart gaps from early January on Tuesday, provided strength for prices to bounce also, said Anne Frick, senior oilseed analyst with Prudential Financial in New York.

 

Otherwise, fresh fundamental news was light, but weakness in the U.S. dollar and strength in soyoil amid rising crude oil prices added support. Ideas that prolonged weather delays to spring plantings will ultimately retard soybean plantings as well as corn, were seen as a supportive feature also, a trader said.

 

The bullish theme was consistent, but the July contract's inability to hold above its 100-day moving average coupled with corn and wheat pulling off their limit up levels allowed futures to trim its gains, traders added.

 

The DTN Meteorlogix weather forecast calls for rainfall of up to two and a half inches across the Midwest east of the Mississippi River. Field work has been going at a frenzied pace ahead of the rain, but further progress will be shut down at least through the weekend. There will be better opportunities for field work and some planting progress in the northern sector of the Midwest (Minnesota and the Dakotas) due to drier and warm conditions.

 

Following the Midwest rain this week, a stretch of warm and dry weather will cover the region during the first half of next week. This outlook is favorable for soils drying out and field work to occur. However, the last half of next week, beginning May 3, shows a strong likelihood for renewed shower and thunderstorm activity in the Midwest, Meteorlogix forecasts.

 

On tap for Thursday, the Census Bureau will release its March soy crush Report 8 a.m. EDT (1200 GMT). U.S. soybean crush for March is expected to be 154.9 million bushels. March soymeal stocks are seen increasing to 325,800 short tonnes, up from the 292,600 reported for February. Soyoil stocks are seen increasing to 3.398 billion pounds in the report, up from 3.284 billion the previous month.

 

U.S. Department of Agriculture is scheduled to release weekly export sales figures for the week ended April 19 at 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires estimated soybean sales would range from 150,000 to 350,000 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, buyers and sellers were scattered among various commission houses, speculative funds estimated buyers of between 4,000 and 5,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended sharply higher, buoyed by a speculative buying push in unison with the rest of the CBOT ag complex, analysts said. Soyoil futures rallied to over once week highs, underpinned by speculative fund buying with borrowed strength from rallying crude oil and gas prices attracting buyers, said Scoville.

 

Soymeal futures ended higher, but well off midday gains. The market spiked higher on speculative fund buying along with the rest of the complex, but once other market pulled off their highs, selling interest surfaced to press prices from their highs, traders said. Soyoil/soymeal spreading provided additional pressure down the stretch to trim advances as well, traders added.

 

July oil share ended at 45.61% and the July crush ended at 64 1/4 cents.

 

In soyoil trades, speculative funds were estimated buyers of 5,000 contracts. Tenco bought 400 December and Calyon Financial bought 300 July. JP Morgan sold 700 may and 500 July, Citigroup sold 600 July and Fimat sold 400 July.

 

In soymeal trades, Tenco bought 1,600 July, RJ O'Brian bought 1,000 December, Rosenthal bought 800 July and Man Financial bought 500 May. Speculative fund buying was estimated between 6,000 and 7,000 contracts.