May 16, 2007

  

CBOT Soy Review on Tuesday: Speculative fund buying lifts prices again

 

 

Chicago Board of Trade soybean futures ended higher across the board Tuesday, extending their upward trend on the back of speculative fund buying.

 

July soybeans settled 7 1/2 cents higher at US$7.78, and November soybeans finished 7 1/2 cents higher at US$8.07. July soymeal settled US$1.70 higher at US$208.20 a short tonne. July soyoil ended 11 points higher at 34.60 cents a pound.

 

Speculative funds were big buyers in soybeans for the third day in a row, as the realization that the 2007 U.S. soy crop has a long way to go before plantings are done enticed buyers to add risk premium, analysts said.

 

Technical strength, with active contracts holding firmly above major moving average support added price strength to ignite speculative interest as well, traders said. Nevertheless, with the crop still in the planting stage and every bushel counted on this year to sustain a comfortable 2007-08 ending stock level, traders are choosing to err on the side of caution as many uncertainties still lie ahead for the market, a CBOT commission house broker added.

 

The combination of technical support and crop uncertainties managed to overshadow a strong planting pace for last week, with talk of La Nina potentially producing a warm, dry summer in the central U.S., keeping sellers on the run, traders said.

 

Meanwhile, the DTN Meteorlogix forecast said a cool front crossing the Plains and Midwest will be a rain-maker for much of the primary U.S. crop areas during the next couple days. There was a swath of rain totaling up to one inch in the western Midwest Tuesday, running from Kansas northeast to Lake Superior. This shower belt will move east into the eastern Midwest Tuesday night and Wednesday. The overall impact of the rains will be positive for emerging crops. Temperatures will turn cooler as well across the central U.S. during the balance of this week.

 

Weather forecast models continue to show a storm system developing for the central U.S. during next week. However, the latest outlook is for heavier rains in the western Midwest, with near to above-normal rainfall for this time of the year, and normal to below-normal rainfall in the eastern Midwest. Temperatures across the entire Corn Belt will be normal to above normal. This isn't as promising an outlook for follow-up rain in Illinois, Indiana and Ohio, where the first half of May has been dry. The impact of this less-than-desirable moisture pattern doesn't look to be critical at this point, but a lack of rainfall during what is normally one of the wettest months of the year is of concern with much of the growing season still ahead, Meteorlogix reports.

 

In pit trades, JP Morgan bought 500 November, Fimat bought 2,500 July, Man Financial bought 700 July and 800 November, RJ O'Brien bought 500 July and 600 March. Fimat and Rand Financial each sold 400 July, and UBS Securities sold 600 July. Speculative fund buying was estimated at 9,000 contracts.

 

 

SOY PRODUCTS  

 

Soy product futures ended higher, rising in unison with price strength in soybeans, analysts said. Soyoil managed to feed off soybean strength, with the exhaustion of early selling pressure, a rebound in crude oil and bullish long-range outlooks keeping a floor under the market, analysts said.

 

Soymeal futures climbed to one-month highs, benefiting from spillover support from soybeans and light soyoil/soymeal spread unwinding, traders said.

 

July oil share ended at 45.38% and the July crush ended at 60 3/4 cents.

 

In soyoil trades, Bunge Chicago and Fimat each bought 300 July. Fimat sold 400 July, and UBS Securities sold 300 July. Speculative fund buying was estimated at 1,000 lots

 

In soymeal trades, speculative fund buying was estimated at 1,000 lots, with ADM Investor Services buying 300 July and 200 December, and Bunge Chicago buying 500 July. ADM Investor Services sold 300 July, and Fimat sold 700 July.