May 17, 2007

 

CBOT Soy Review on Wednesday: Soars on speculative buys and crop uncertainties

  

 

Chicago Board of Trade soybean futures ended sharply higher Wednesday, rallying to 6-week highs on aggressive fund buying interest.

 

July soybeans settled 14 3/4 cents higher at US$7.92 3/4, and November soybeans finished 14 1/4 cents higher at US$8.21 1/4. July soymeal settled US$5.00 higher at US$213.20 per short tonne. July soyoil ended 13 points higher at 34.73 cents a pound.

 

Consistent and aggressive fund buying has fueled soybeans' upward push over the past four days, with a friendly technical picture attracting speculators, said Brian Hoops, president Midwest Market Solutions in Yankton, South Dakota.

 

Technical strength has kept speculative buyers enthused and with strength in world vegoil markets and underlying uncertainties surrounding the 2007 crop, sellers continue to run for cover, he added.

 

Uncertainty surrounding crop potential amid weather risks provided fundamental strength to prices, analysts say. The margin of error for the 2007 U.S. soybean crop is small and any threat to yields could drop already tightening 2007-08 ending stocks estimates to uncomfortable levels.

 

Speculative buying was the feature of the day with pre-placed buy orders activated once active futures eclipsed overhead resistance levels, traders said. Active option buying added to the bullish theme in the market as well, traders added.

 

Meanwhile, the DTN Meteorlogix forecast said rainfall of up to six-tenths of an inch is moving across the eastern Midwest, and will end during Thursday. These showers are welcome, but are not enough to make up moisture deficits that have developed in this sector of the U.S. Corn Belt.

 

In the next five days, generally dry weather is in store for the entire Midwest, which will further enhance field work progress and assist in the recovery efforts in areas which had flooding during the first 10 days of May, Meteorlogix forecasts. The end of this week will features some very cool temperatures for the season. Low temperatures Thursday and Friday morning will sink into the mid to upper 30s Fahrenheit in the upper Midwest through the immediate Great Lakes area. Some light frost is possible; however, temperatures do not appear to be cold enough to cause significant damage to emerged crops, Meteorlogix reports.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release its weekly export sales report 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires anticipate commitments in the 200,000 to 350,000 metric tonne range

 

In pit trades, JP Morgan bought 1,300 November, Tenco bought 1,000 November, Rand Financial bought 1,100 July, Rand Financial and Fimat each bought 1,000 July, ADM Investor Services, Fortis, Iowa Grain, and Man Financial each bought 500 July. Speculative fund buying was estimated near 13,000 contracts.

 

Sellers were scattered among various commission houses. ADM Investor Services sold 500 July, Tenco sold 500 July and 700 November, with Fortis and UBS securities each sellers of 400 July.

 

In options, ADM Investor Services was an active buyer. The firm a reported buyer of 2,000 lots each of July US$7.40 puts, July US$8.40 calls, July US$7.30 puts, and June US$8.20 calls. They purchased 1,000 lots each of July US$7.20 puts, July US$8.40 calls, and 2,000 July US$7.60 calls.

 

 

SOY PRODUCTS

  

Soy product futures ended higher across the board Wednesday, rallying in unison with sharp gains in soybeans. Soymeal futures propelled to 6-week highs, buoyed by a combination of technical buying and supply concerns amid crop uncertainties for soybeans, analysts said.

 

Soyoil futures ended higher, but lost product share to soymeal. Soyoil set new contract highs early in the day, but after satisfying that technical objective and soymeal began its charge, profit taking emerged with traders unwinding soyoil/soymeal spreads, traders said.

 

July oil share ended at 44.89% and the July crush ended at 58 1/4 cents.

 

In soyoil trades, speculative funds were estimated buyers of 2,000 contracts. Buying was widely scattered among various commission houses. Bunge Chicago sold 700 July, Goldenberg sold 500 December, Iowa Grain sold 400 July, and ADM Investor Services and Tenco each sold 300 July.

 

In soymeal trades, speculative fund buying was estimated near 3,500 lots. Fimat and Fortis each bought 400 July, with Man Financial buying 500 July, 400 October and 400 December. Bunge Chicago, JP Morgan, Fimat and UBS Securities each sold 400 July.