May 17, 2008

 

CBOT Soy Review on Friday: Bounce; Argentine strike, outside markets buoy

 

 

Chicago Board of Trade soybean futures ended sharply higher Friday, bouncing on Argentina strike concerns, technical buys and outside market support.

 

July soybeans settled 30 1/2 cents higher at US$13.78 and November soybeans ended 30 cents higher at US$13.49 1/4. July soymeal settled US$5.00 higher at US$350.00 per short tonne. July soyoil finished 182 points higher at 61.85 cents per pound.

 

The extension of the Argentina farmers' strike served as the spark to lift prices, with fresh Chinese purchases and technical buying attracting short covering to retrace Thursday's losses, said John Kleist, broker/analyst at Allendale Inc. in McHenry, Ill.

 

The Argentina strike is seen diverting export demand to U.S. and Brazilian ports, and with the U.S. already projecting tight ending stocks, traders added premium to prices, analysts said.

 

Bullish outside market influences, with sharply higher crude oil, and silver and gold futures added to the supportive tonnee, traders said. Favorable near term weather outlooks for aggressive corn plantings is seen limiting acreage shifts to soybeans to keep prices firmly underpinned, traders added.

 

The active July contract bounced to 3-week highs, briefly breaching psychological resistance at the US$14.00 a bushel level before crude oil eased off its highs to attract profit taking, a CBOT floor trader said. The November future rallied to over 2-month highs.

 

However, futures remain in a longer range sideways trading range, jockeying around in volatile action with traders awaiting prices to break US$14.15 basis July futures before committing to ideas a new uptrend has been established, Kleist said.

 

"It remains to be seen if the recent up move is solid of just smoke and mirrors, particularly if Argentina settles its strike issues next week and demand shifts back to Argentine shores," Kleist added.

 

Argentina's farmers decided to extend a nationwide farm strike until at least next Wednesday, when they will meet to consider their next moves, the leaders of the four leading farm groups announced at a press conference Thursday.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures rallied in unison with soybeans, with soyoil futures the upside leader. Soyoil futures settled sharply higher, roaring back from Thursday's declines demand hopes amid Argentina's strike, borrowed strength a crude oil price spike and adjustments in the oil/meal spread relationship, analysts said.

 

Soymeal futures ended higher, rallying on spillover from soybeans. The active July future climbed to match a 3-week high, before oil/meal spreading and profit taking surfaced to trim advances, traders said.

 

July oil share ended at 46.91% and the July crush ended at 72 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.