May 24, 2007

 

CBOT Soy Review on Wednesday: Up; recoups Tuesday losses on speculative buying

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, rising on speculative money flow and lingering concerns over dryness in the eastern Midwest.

 

July soybean futures settled 7 1/4 cents higher at US$8.00 1/2, and November soybeans finished 8 1/4 cents higher at US$8.30 1/2. July soymeal settled US$4.10 higher at US$218.90 per short tonne. July soyoil ended 6 points higher at 34.89 cents a pound.

 

The flow of speculative money into the market enabled futures to recoup losses from Tuesday's setback, with the fundamental backdrop of dryness in the eastern Midwest providing support to prices, said Mike Zuzolo, analyst with Risk Management Commodities Inc. in Lafayette, Ind.

 

Technically motivated buying was a feature as well, with the ability of the market to breach resistance at Tuesday's highs uncovering pre-placed buy orders to secure the market's run to session highs, traders added.

 

Otherwise, overall activity was relatively subdued, with the gains seen as more of a consolidative bounce as futures hold in a sideways pattern awaiting fresh news to spark momentum, a CBOT floor analyst said.

 

Near-term weather forecasts look favorable for crops, but longer-range forecasts are questionable for the eastern Midwest. This should keep prices underpinned heading into an extended Memorial Day holiday weekend, he added.

 

CBOT markets will be closed Monday in observance of the Memorial Day holiday. The DTN Meteorlogix forecast calls for total rainfall through the Memorial Day weekend of up to 2 1/2 inches in the western Midwest. The impact of these rains will be mixed: beneficial for crop moisture, but also offering the potential for renewed flooding in areas recovering from flooding earlier in May. There is also a potential for severe weather damage in individual storms.

 

Eastern Midwest crop areas will have much less rain during the next week than the western Midwest. Total rainfall will range up to one inch, with the heaviest rains in Illinois through Wisconsin. The rains will be welcome, according to Meteorlogix, and are much needed due to a lack of rain during May in the corn belt east of the Mississippi River.

 

An additional benefit to weather conditions in the eastern Midwest will be in the form of temperatures cooling to normal to slightly above normal values, according to the weather service. This cooling will ease the drawdown of soil moisture supplies in the region, it reported.

 

On tap Thursday, the Census Bureau's crush report for April is scheduled for release at 8 a.m. EDT (1200 GMT). U.S. soybean crush is expected to be 146.1 million bushels in the monthly report, down from the March crush figure of 155.9 million bushels. April soymeal stocks are seen increasing to 347,250 short tonnes, up from the 330,292 reported for March. Soyoil stocks are seen decreasing to 3.314 billion pounds in the report, down from 3.366 billion the previous month.

 

The U.S. Department of Agriculture is scheduled to release its weekly export sales report Thursday at 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires anticipate commitments in the 2,000,000 to 2,800,000 metric-tonne range.

 

In pit trades, ADM Investor Services bought 500 July, JP Morgan bought 600 July, and Man Financial bought 1,000 July. Speculative funds were estimated buyers of 4,000 lots. Sellers were scattered among various commission houses.

 

 

SOY PRODUCTS  

 

Soy product futures ended higher across the board Wednesday, with soymeal the upside leader.

 

Soymeal futures rallied to 6-week highs on soyoil/soymeal spread unwinding and spillover support from soybeans, analysts said. The market adjusted the product spread with soymeal boosting crush margins amid profit- taking in soyoil futures, analysts added.

 

Soyoil futures ended higher, but lost product share to soymeal. The market consolidated previous gains, with speculative profit-taking keeping a lid on prices, despite strong gains in soybeans, analysts said. The market was overbought heading into the session, and with world vegoils taking a step back, speculative buyers had little enthusiasm to aggressively add length, traders said.

 

July oil share ended at 44.35% and the July crush ended at 64 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various firms. Fimat and Man Financial were each buyers of 300 July, while JP Morgan and UBS Securities each sold 300 July. Speculative fund selling buying was estimated at 1,000 lots.

 

In soyoil trades, Bunge Chicago bought 700 July, JP Morgan bought 600 September and 300 December, Fimat bought 500 July and UBS Securities bought 300 July. JP Morgan sold 400 July and Rand Financial sold 700 July. Speculative fund selling was estimated at 2,000 lots.