May 25, 2007

 

CBOT Soy Review on Thursday: Extends uptrend on weather, soyoil strength

 

 

Chicago Board of Trade soybean futures ended higher Thursday, continuing its technical uptrend, with weather concerns and spillover strength from soyoil underpinning features.

 

July soybeans settled 4 3/4 cents higher at US$8.05 1/4, and November soybeans finished 3 3/4 cents higher at US$8.34 1/4. July soymeal settled US$1.70 lower at US$217.20 per short tonne. July soyoil ended 69 points higher at 35.58 cents a pound.

 

With the eastern Midwest in need of rain and private forecasters reducing the chances of rain systems holding together as they move eastward, produced a scenario of who wants to be short heading toward a long weekend, analysts said.

 

CBOT markets will be closed Monday in observance of the Memorial Day holiday.

 

The combination of dryness issues for the eastern Midwest, bullish technical momentum, and spillover strength from soyoil ganged up to keep speculative buyers enthused, said Dan Basse, president AgResource Co. in Chicago.

 

Speculative buying was the driver of the market, with technical momentum a key ingredient in the gains, traders said. The ability of futures to push above recent highs uncovered pre-placed buy orders to propel prices to 3-month highs, traders added.

 

Otherwise, the market had few fresh incentives, with weekly export sales and monthly Census Crush data seen as neutral to prices. The DTN Meteorlogix forecast calls for rainfall of up to one-and-one-half inch during the rest of this week through Saturday in the western Midwest. This rainfall trend may be too much of a good thing due to the danger of flooding with heavy rain, severe weather possibilities.

 

Eastern Midwest crops continue to be in the shadow of rainy weather. Showers and thundershowers over the next few days will bring no more than one-half inch of rain to the region, mostly in Illinois and Wisconsin. Indiana and Ohio will be on the lighter side of the moisture, with no more than one-quarter inch of rain expected over the next five-days. This light shower trend, along with temperatures remaining in the above-normal category for Indiana and Ohio, will draw down soil moisture and may bring on some crop stress during the upcoming holiday weekend, Meteorlogix forecasts.

 

In pit trades, Man Financial bought 700 July, ADM Investor Services, JP Morgan and Penson GHO each bought 200 July. Tenco sold 600 November, and UBS Securities sold 400 November. Speculative funds were estimated buyers of 3,000 lots.

 

 

SOY PRODUCTS

  

Soy product futures ended mixed, with soyoil exerting its dominance on speculative induced price gains. Soyoil futures soared on spec buying, with prices rallying to the highest level for a nearby contract since June 1984 on continuation charts. The combination of sharply higher overnight prices in Malaysian palm oil futures and bullish longer term global vegoil demand prospects tied to biodiesel served as the catalyst to reignite speculative buying, analysts said.

 

Soymeal futures ended lower across the board, pressured by a large dose soyoil/soymeal spreading, said Jack Scoville, analyst with the Price Futures Group in Chicago. The soycomplex was fueled by soyoil strength as people jump on board the bullish biodiesel wave and that weighed on soymeal, he added.

 

July oil share ended at 45.03% and the July crush ended at 64 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, Prudential Financial bought 600 July, Man Financial bought 500 July, Fimat bought 600 July and 500 August, Rand Financial and JP Morgan each bought 400 July. Penson GHO sold 500 December, JP Morgan sold 400 July and 300 August. Speculative fund buying was estimated at 3,000 lots.