June 2, 2006

 

CBOT Soy Review on Thursday: Higher; weather talk spurs speculative buys

 

 

Chicago Board of Trade soybean futures ended higher across the board Thursday, bouncing on speculative and technical buying amid concerns over near-term crop conditions.

 

July soybeans ended 7 1/4 cents higher at US$5.86 3/4, July soymeal settled US$2.80 higher at US$175.20 a short tonne, while July soyoil ended 1 point lower at 25.15 cent a pound.

 

The debate over weather conditions in the Midwest next week helped fuel the market's recovery, as talk of heat and dryness served as a catalyst to spark short-covering interest, said Dan Basse, president AgResource Company in Chicago.

 

Firm cash prices, spillover support from corn and the market's ability to eclipse resistance at the July contract's 10-day moving average - US$2.85 1/4 -provided additional strength to lift prices, traders added.

 

The active July future traded an outside higher day on technical charts, as the market continues to be reluctant to conform into a bear market as bearish fundamental outlooks serve as only a limiting feature to upside movement, said John Kleist of Kleist Ag Consulting.

 

Meanwhile, the DTN Meteorlogix weather outlook calls for rainfall of up to one inch in the eastern and southern Midwest (east of the Mississippi River through the Ohio Valley) and dry conditions for the western Midwest through the northern Plains into Friday. The showers will be mostly beneficial for corn and soybean development in the U.S. corn belt.

 

Following the late-week rainfall, conditions will turn much drier across the entire central U.S. during the upcoming weekend into the first part of next week. Temperatures will trend to mostly above-normal values, with many readings in the 80s Fahrenheit in the Midwest and the low 90s Fahrenheit in the Plains, Meteorlogix said.

 

On tap for Friday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report for the week ended May 25. Analysts surveyed by Dow Jones Newswires anticipate soybean commitments in a range of 220,000 to 350,000 metric tonnes. Soymeal sales are expected in a range of 50,000 to 100,000 tonnes. Soyoil sales are pegged to fall within a range of zero to 10,000 tonnes.

 

In pit trades, ADM Investor Services bought 500 July, ABN Amro bought 1,000 November, Calyon Financial bought 1,000 July, Goldenberg Hehmeyer bought 700 September, JP Morgan bought 1,000 July and 1,000 November, Rand Financial bought 1,000 July and 500 November, and Rosenthal bought 1,000 November.

 

ADM Investor Services sold 2,000 July, Citigroup sold 700 July, JP Morgan sold 600 July and Rand Financial sold 800 July. Commodity fund buying was estimated at 7,000 contracts. South American soybean futures ended higher, with the July future settling 7 cents higher at US$5.99.

 

 

Soy Products

 

Soyoil futures ended Thursday's session with light losses, continuing their consolidation from prior gains in unison with crude oil futures. However, futures were able to trim their early losses, with a modest recovery in crude prices providing underpinning support.

 

Soymeal futures ended with moderate gains, benefiting from the unwinding of soyoil/soymeal spreads. The spread unwinding was the catalyst for the gains, with technical buying emerging after the July future breached overhead resistance levels, analysts said.

 

July oil share ended at 41.78%, and the July crush ended at 75 1/4 cents.

 

In soyoil trades, O'Connor bought 1,000 July, ADM Investor Services bought 600 July, Iowa Grain, Tenco and JP Morgan each bought 500 December, and Citigroup bought 600 August. Sellers were scattered among various firms.

 

In soymeal trades, JP Morgan bought 500 July and 1,500 December, Rosenthal and Tenco each bought 800 December. JP Morgan sold 700 July and O'Connor sold 300 July. Commodity fund buying was estimated near 5,000 lots.