May 26, 2007

  

CBOT Soy Review on Friday: Ends at session highs on speculative buys

 

 

Chicago Board of Trade soybean futures ended at session highs Friday, rallying into the extended holiday weekend on speculative-led buying, analysts said.

 

July soybeans settled 7 1/4 cents higher at US$8.12 1/2, and November soybeans finished 7 1/4 cents higher at US$8.41 1/2. July soymeal settled US$1.00 higher at US$218.20 per short tonne. July soyoil ended 26 points higher at 35.84 cents a pound.

 

The market is maintaining upside momentum, with uncertainty tied to eastern Midwest crop conditions, strength in world vegoils markets and bullish charts signals combining to attract fresh speculative buys, said Chad Henderson, analyst with Prime Ag Consultants in Brookfield, Wisc.

 

The market rallied to new three-month highs, as traders added risk premium amid forecasts for only light, spotty showers to move through eastern Midwest crop areas in need of good soaking rains, analysts added.

 

Longer-term concerns about adequate U.S. and global production and strong projected demand from the alternative-fuels sector provided underlying strength to aide the bullish tone, traders added.

 

Nevertheless, technical momentum was a key driver of prices, with futures targeting contract highs as a near-term objective basis the new-crop November, Henderson added. November soybeans climbed to and intraday high of US$8.42, just shy of the contract high of US$8.43.

 

Analysts say traders were unwilling to exit long positions until rains actually move into the eastern belt and a clear picture of acreage is established.

 

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

 

The DTN Meteorlogix forecast said the next seven days will bring some light rains to the Midwest, including the eastern half of the region. However, the forecast calls for no more than three-quarters of an inch of rain in this region, mostly in Illinois. Crop stress is beginning to show up in the eastern Midwest. With just an average 1.18 inch of rain reported during May 2007, it has been the driest month of May since 1934, when an average of 1.12 inch fell in the midst of the Dust Bowl days. A widespread, soaking rain is not in the outlook for this region, Meteorlogix reports.

 

In pit trades, buyers were scattered among various commission houses, with FCStone, Calyon Financial, Man Financial, and RJ OBrien featured buyers. Speculative fund buying was estimated at 3,000 lots. RJ O'Brien sold 400 July, and UBS Securities sold 300 November.

 

 

Soy Products

 

Soy product futures ended higher, with soyoil carving out some new product share. Soyoil rallied to new contract highs and the highest level for a nearby future since 1984 on technical momentum and bullish global vegoil outlooks associated with an expanding global biofuels industry, analysts say. However, futures ended well off session highs, trimming advances on scattered profit taking pressure, analysts added.

 

Soymeal futures ended higher, feeding off the supportive tone filtering through the soycomplex. However, continued price strength in soyoil remains an undermining feature to keep the market losing product share to soybeans, analysts said.

 

July oil share ended at 45.09% and the July crush ended at 61 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative funds estimated buyers of 1,500 lots on the day.

 

In soyoil trades, Bunge Chicago bought 900 July and Tenco bought 300 July, with additional buyers scattered among various firms. Penson GHO sold 500 July, with additional sellers scattered among various commission houses. Speculative fund buying was estimated at 1,000 lots.