May 2, 2009

 

CBOT Soy Review on Friday: Market soars to 7-month highs on technical momentum

 

 

Chicago Board of Trade soybean futures finished the week on strong footing, soaring to seven-month highs Friday on bullish technical momentum and a solid fundamental foundation.

 

CBOT May soybeans ended 32 cents higher at US$11.02, July soybeans settled 36 cents higher at US$10.91 and November soybeans finished 27 1/2 cents higher at US$9.71.

 

July soy meal settled US$11.50 higher at US$342.00 per short tonne. July soyoil finished 124 points higher at 37.75 cents per pound.

 

Speculative buying was featured once again, with the ability of active contracts to eclipse technical resistance on charts at the previous highs for the 2009 calendar year, uncovering pre-placed buy stop orders, traders said.

 

The path of least resistance was higher, with tightening old crop stocks, strong demand and declining crop estimates for Argentina's soy crop serving as fundamental support.

 

Strength from outside markets, with a lower U.S. dollar, higher crude oil prices and challenging weather for planting generated further support to ignite upward momentum, said Bill Nelson, analyst with Doane Advisory Service in St. Louis, Mo.

 

New crop futures advanced as well, but deferred months continued to lose ground to nearby contracts on bull spreads.

 

The July/November spread widened to US$1.20 a bushel, up from Thursday's settlement of US$1.11 1/2.

 

A bearish new crop case can be made from planting delays potentially shifting some corn acres to soybeans, Nelson said. However, late soybean plantings result in lower yields also, offsetting the higher number of acres and that is keeping new crop months from climbing, Nelson added.

 

The strong technical close is seen extending into next week, but traders are mindful that a shift in the weather, weakness in outside markets or the rekindling of swine flu fears could alter the bullish focus moving forward, analysts said.

 

 

SOY PRODUCTS

 

Soy product futures charged higher, rallying in step with the strong gains in soybeans. Soymeal futures were supported by technical buying after prices eclipsed chart resistance, with solid export demand and tight nearby stocks underpinning features as well.

 

Upside momentum in soyoil was energized by technical buys and spillover support from crude oil futures. However, soyoil lost product share to meal on spreads as ample domestic stocks limit advances, analysts said.

 

July oil share ended at 35.56%. The July soybean crush ended at 76 3/4 cents.