May 6, 2006

 

CBOT Soy Review on Friday: Settle up, but well off highs

 

 

Chicago Board of Trade soybean futures ended higher Friday, but well off earlier highs, as prices were scaled back after early buying strength was exhausted.

 

July soybeans ended 2 3/4 cents higher at US$6.06 1/2, July soymeal settled US$1.30 higher at US$178.60 a short tonne, while July soyoil ended 22 points higher at 25.53 cents a pound.

 

The market was buoyed by technically related buying and borrowed strength from wheat, but once futures satisfied a near-term technical objective and wheat pulled off its highs, buyers had little reason to sustain the early gains, said a CBOT commission house broker.

 

Technical analysts said the market had formed a bullish symmetrical triangle on the daily bar chart, and given that the most recent trend in soybeans was up (from the April low), then odds favored the upside "breakout" from the pattern.

 

The bullish influence of speculative buying kick-started the gains, with futures matching a two-month high. Supportive momentum from strength in the soy products helped underpin prices, but with bearish underlying fundamentals and a quiet export arena, upside movement was limited without any outside market momentum, traders added.

 

Futures settled into narrow trading ranges for most of the day, with late, end-of-the day and week positioning carving out session lows ahead of the close. Meanwhile, analysts say favorable weekend weather conditions should promote an active planting pace, with many traders and analysts anticipating soybean seedings near 25% complete in Monday's U.S. Department of Agriculture crop-progress report.

 

The DTN Meteorlogix weather outlook said that for this weekend and through the first part of next week, forecasts call for a continued prospect for scattered frost and some light freezing conditions in the northern Midwest and the western Plains. Coldest temperatures will be in the area from Minnesota through Wisconsin, northeastern Iowa, northern Illinois, northern Indiana, Michigan and northern Ohio. Temperatures will reach the low- to mid-30s Fahrenheit in this area. A light freeze is in store for Wisconsin and Michigan, with frost elsewhere in the northern Midwest during Friday night and Saturday night.

 

In other news, India's decision to delay the implementation of new rules governing imports of genetically modified foods until July 7 will help revive imports of soy oil which slowed down in the past month, industry officials said Friday.

 

In pit trades, Man Financial and JP Morgan each bought 1,000 July, and Calyon Financial, Prudential Financial and RJ O'Brien each bought 500 July.

 

On the sell side, UBS securities sold 1,000 July and JP Morgan sold 300 July. South American soybean futures ended higher. The July future settled 6 1/4 cents higher at US$6.34.

 

 

SOY PRODUCTS

 

Soy product futures bounced higher, fueled by technically inspired buying and net speculative buying over the course of the day. Soyoil futures managed to gain product share, continuing to benefit from biodiesel enthusiasm and talk of the potential for increased soyoil imports by India.

 

Soymeal futures climbed in step with the rest of the complex, but without any fresh fundamental news, upside movement remained limited, traders said.

 

July oil share ended at 41.68%, and the July crush was at 67 1/4 cents.

 

In soymeal trades, Man Financial bought 600 July, Tenco bought 500 July, and Fimat bought 300 July. Sellers were scattered among various commission houses.

 

In soyoil trades, ABN Amro and RJ O'Brien each bought 300 July, with scattered buying reported from various commission houses. ADM Investor Services and Iowa Grain each sold 400 July, while Citigroup, and Fimat and Tenco each sold 300 July.