May 31, 2007

 

CBOT Soy Review on Wednesday: End higher; recoups most of Tuesday's losses

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, recouping most of Tuesday's losses on speculative buying associated with bullish longer term fundamental outlooks, analysts said.

 

July soybeans settled 10 3/4 cents higher at US$8.08 1/4, and November soybeans finished 10 1/4 cents higher at US$8.37. July soymeal settled US$2.40 higher at US$216.80 per short tonne. July soyoil ended 38 points higher at 35.56 cents a pound.

 

Tuesday's losses were a bit overdone, and with neighboring grains up sharply, and uncertainties surrounding eastern Midwest weather, traders returned their attention to bullish broad world trends, said Bill Nelson, associate vice president A.G. Edwards and Sons in St. Louis.

 

The bigger picture of the market remains on the long term draw down of soybean stocks, and with the market taking on a more worldly view, the market has developed resistance to shallow price pullbacks, Nelson added.

 

Speculative buying was a featured attraction, with talk by some private weather forecasters of a moisture blocking ridge building in the Midwest, keeping sellers reluctant to aggressively press the market, a CBOT floor trader said.

 

Otherwise, technical factors were key directives, with bullish traders encouraged by the July contract's ability to settle firmly above the psychological US$8.00 per bushel level, analysts added.

 

The DTN Meteorlogix forecast calls for showers and thunderstorms through Friday in the western Midwest, with rain of up to one and one-half inches. This sector of the Midwest will remain unsettled, with additional showers during the upcoming weekend.

 

The eastern Midwest has only light, scattered rainfall ahead to finish out the month of May and begin the month of June, Meteorlogix forecasts. Several periods of showers during the next five days will bring total rainfall of up to one inch in only isolated, spotty coverage. Meanwhile, some significant heat is moving into the eastern Midwest in the short term, Meteorlogix added in the forecast.

 

In pit trades, ADM Investor Services bought 400 November, Fortis and USA each bought 400 July, Fimat bought 300 July and RJ O'Brien bought 1,000 July. JP Morgan sold 500 July and 500 March, RJ O'Brien sold 500 July and UBS Securities sold 1,000 July. Speculative funds were estimated buyers of between 6,000 and 7,000 contracts.

 

 

SOY PRODUCTS

  

Soy product futures ended higher across the board, buoyed by underlying price support from soybeans. Soymeal futures ended higher, trading an outside higher day on technical charts as futures consolidated Tuesday's declines, analysts said.

 

Soyoil futures settled higher, managing to recover from initial losses on speculative led buying. The market was able to shake off the bearish influence of sharply lower overnight Malaysian palm oil prices, as bullish biofuel demand prospects remain underpinning features, analysts say. Spillover support from soybeans and price strength energy futures added support to promote the higher theme, analysts added.

 

July oil share ended at 45.06% and the July crush ended at 59 3/4 cents.

 

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

 

In soyoil trades, Speculative fund buying was estimated at 3,500 contracts. Tenco bought 900 July, Fiat bought 500 July and Rand Financial bought 400 July. JP Morgan sold 300 October and 300 December, Fimat sold 500 July and Rand Financial sold 300 December.