May 18, 2006

 

CBOT Soy Review on Wednesday: Firmer in 'reluctant rally'

 

 

In what some analysts termed "a reluctant rally" soy complex futures at the Chicago Board of Trade closed Wednesday's session with minor gains, supported by strength in the corn and wheat markets.

 

Most active July soybeans rose 1 1/4 cents to US$6.04 a bushel and new-crop November soybeans rose 3/4 cent to US$6.25 1/2. July soymeal rose 20 cents to US$176.40 a short tonne and July soyoil gained 11 points to 25.82 a pound.

 

"We remain in a reluctant rally, a reluctant bull market because of the seemingly negative fundamentals. If you look at new-crop corn, it could to get to US$3 and if you have wheat prices over US$4, it's makes it tough to be outright bearish in beans," said John Kleist, of Kleist Agriculture Consulting.

 

Increased soybean acreage for the 2006-07 crop year and high ending stocks are among some of the negative fundamental factors for soybeans, but Kleist said the soybean market has ignored those issues since about April, when July soybeans made a low of US$5.68 a bushel.

 

"Ever since then the market's been in a choppy and volatile upward move. It's not like the concerted effort we have with the index funds buying corn and wheat. That's why when the market makes a new swing high, it tries to set back. It's always a choppy, broadside move," he said.

 

Other floor sources agreed there was little soybean-specific news behind the move higher.

 

"The grains were all the action (Wednesday), the beans were very quiet. Wheat led the way, corn followed," said one veteran CBOT trader.

 

"We're going to get a lot more planted. We have a window (of clear weather) for the next four to five days. We're expecting farmers can get a lot planted, maybe 50% or more," the floor-based trader said.

 

DTN Meteorlogix weather firm notes the near-term weather forecast for temperatures remains cool, while extended forecast charts offer a notably warmer trend for the region. During the rest of this week into the weekend temperatures are seen generally below normal.

 

On Monday, the U.S. Department of Agriculture said soybean planting was 33% done.

 

Soybeans were generally firmer Wednesday, starting the pit trade with gains, but weakened for part of the session when the dollar rose and crude oil and metal prices dipped. Soybeans are closely tracking these markets for possible inflationary cues.

 

Metals prices rose earlier Wednesday after the release of the U.S. Consumer Price Index data, an inflation gauge, which rose in April. The CPI rose 0.6%, boosted by a 3.9% increase in energy - gasoline prices up 8.8% - but no change in food prices. Core prices increased by 0.3%, with services up 0.3%.

 

Buyers in soybeans included ADM buying 900 July; Merrill Lynch, FIMAT and Goldenberg Heymeyer buying 200 July; J.P. Morgan buying 500 July; Rand buying 700 July; and SAK buying 300 July. Sellers included Term selling 2,500 November, and Tenco selling 300 July and 200 November. Term spread 1,500 July-November. Funds bought 4,100 contracts.

 

 

SOY PRODUCTS

 

Both soymeal and soyoil were firmer on the back of soybeans and essentially looked to soybeans for direction.

 

The products also dipped for a short time on the influence of speculative and index-fund selling that hit commodities in general at midday before stabilizing.

 

Soymeal buyers included FIMAT buying 800 July and 600 December, and R.J. O'Brien buying 300 July. Funds were net buyers of 2,100 contracts. Sellers included J.P. Morgan selling 600 July.

 

In soyoil, ADM bought 700 July; ABN Amro bought 800 July; Citigroup bought 800 July, 500 August, 100 September and 200 December; and UBS bought 500 July. Iowa Grain sold 1,500 July; Man Financial sold 300 July and Rand sold 600 July.