May 22, 2007

 

CBOT Soy Review on Monday: Settles higher; continues technical uptrend

 

 

Chicago Board of Trade soybean futures ended higher Monday, continuing their technical uptrend on speculative buying, analysts said.

 

July soybeans settled 8 cents higher at US$8.00 1/2 per bushel, and November soybeans finished 8 cents higher at US$8.29 1/4. July soymeal settled US$3.50 higher at US$215.50 per short tonne. July soyoil ended 11 points higher at 35.26 cents a pound.

 

Supportive technical chart signals, the uncertainty of yields for crops planted in dry eastern Midwest soils, and spillover strength from corn served as catalysts to attract buyers, said Brian Hoops, president Midwest Market Solutions in Yankton, S.D.

 

News of China buying 110,000 metric tonnes of U.S. soybeans provided fundamental support as well, with varying forecasts for the eastern half of the crop belt providing enough concern in a year when every bushel per acre will be counted on were underpinning features, analysts added.

 

Meanwhile, technical chart signals played a key role in the advances. The ability of active old crop and new crop futures to breach resistance at their April highs - US$8.01 basis July and US$8.28 basis November - uncovered pre-placed speculative buy orders to keep futures firmly planted in positive territory, said Hoops.

 

Otherwise activity was relatively subdued, with traders looking ahead to Monday afternoon's U.S. Department of Agriculture weekly crop progress report. Analysts expect planting progress to fall in a range of 55% to 65% complete.

 

The DTN Meteorlogix forecast calls for rainfall of up to one and one-half inches to develop in the western Midwest Tuesday through Wednesday. The impact of this rain will be variable: crops now planted will benefit from soil moisture for early growth, but areas of delayed planting due to flooding earlier in May are vulnerable to abandonment because of additional high-water prospects.

 

In the eastern Midwest, showers will develop during the last half of the week, with up to three-quarters of an inch of precipitation. Coverage will be variable. The eastern Midwest is well below average for rainfall during May. North-central Illinois, in particular, is down 95 percent from average on its May rainfall. Soil moisture is diminishing in this sector of the corn belt. However, temperatures this week will cool down to normal to below normal, which will ease the moisture stress, Meteorlogix reported.

 

In pit trades, Fimat bought 600 July, Man Financial bought 400 July and RJ O'Brien bought 300 July, with FCStone and UBS Securities each buying 200 July. Tenco sold 300 July, and Citigroup sold 200 July.

 

 

SOY PRODUCTS

  

Soy product futures ended higher across the board, with soymeal gaining some product share on light short covering and a speculative adjustment in the soyoil/soymeal spread.

 

Soyoil futures ended up, but managed to lose ground to soymeal on a minor technical correction after active contracts ran into resistance at Friday's contract highs, analysts said. The unwinding of oil/meal spreads added mild pressure, but with an emerging global biofuel market and a strong recovery from early losses in energy futures, soyoil finished on firm footing, analysts added.

 

July oil share ended at 45.00% and the July crush ended at 61 1/2 cents.

 

In soyoil trades, buyers and sellers were widely scattered among various commission houses, with JP Morgan buying 300 July, and Fimat a buyer of 600 July. Bunge Chicago sold 1,000 December.

 

In soymeal trades, ADM Investor Services bought 300 July, and Tenco bought 500 July. Bunge Chicago sold 700 December.