June 2, 2007

 

CBOT Soy Review on Friday: Rise on speculative buying; weather Concerns

 

 

Chicago Board of Trade soybean futures ended higher Friday, propped up by speculative buying as the market added risk premium heading into the weekend.

 

July soybeans settled 11 1/4 cents higher at US$8.17 1/2, and November soybeans finished 11 cents higher at US$8.47 1/4. July soymeal settled US$4.50 higher at US$221.40 per short tonne. July soyoil ended 10 points higher at 35.81 cents a pound.

 

The advances were based largely on the weather, amid concerns that light showers forecasted for next week won't provide much relief to dry areas of the southeast, Delta and eastern Midwest, said Dan Basse, president AgResource Company in Chicago.

 

Weather outlooks only call for light and widely scattered showers east of the Mississippi River, leaving unresolved questions for crops in the Ohio Valley and southeast U.S., analysts said.

 

The market was influenced by a little weather enthusiasm until it can get a better picture of next week's weather on Monday, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Speculative fund buying was featured once again, as bullish long range fundamental outlooks continue to overshadow currently ample global inventories, analysts added.

 

Soybean/corn spreading was featured, as participants reestablished spreads unwound Thursday amid month end profit taking, Hannagan added.

 

Otherwise, technical factors were featured with spillover support from soymeal helping lift nearby prices to 3-month highs and new crop futures to new life of contract highs, analysts said.

 

Meanwhile, the DTN Meteorlogix forecast calls for rainfall of up to one and one-half inches over the western Midwest during the weekend. Some individual storms will bring heavier rainfall. There is the prospect of renewed flash flooding in Iowa through northern and central Missouri with these storms - leading to unfavorable crop conditions in a sector of the Corn Belt which is already laboring under the effect of heavy rainfall during May.

 

Eastern Midwest crop areas continue to have a less-than-desired rainfall outlook through the middle of next week. During the next five days, showers will bring no more than one-half inch of rain to the region, with the best chance for this moisture in Illinois. The first half of June offers a variable rainfall outlook for the Midwest corn-belt. In general, conditions remain most favorable for rain in the western and northern sectors of the region, while a below-normal moisture outlook is still in place over the Ohio Valley, with no more than normal rain ahead for the eastern Midwest, Meteorlogix reports.

 

In pit trades, ADM Investor Services and JP Morgan each bought 400 July, Citigroup and RJ O'Brien each bought 300 July. JP Morgan sold 700 July, Tenco sold 1,000 July and Fimat sold 500 July. Speculative fund buying was estimated at 6,000 contracts.

 

 

SOY PRODUCTS

  

Soy product futures ended higher Friday, led by price strength in soymeal futures. Technically inspired buying and concerns that a possible strike at Bunge's Danville crushing plant could tighten U.S. soymeal supplies served as catalysts to boost soymeal futures to 2-month highs, analysts said. Heavy speculative buying was featured, with the ability of the July future to hold support at its 100-day moving average uncovering fresh buying interest, traders added.

 

Soyoil futures ended higher, but lost ground to soymeal on soyoil/soymeal spread unwinding. Soyoil continued its consolidation phase after setting new 23 year highs earlier in the week, traders said. However, despite losing ground to soymeal, analyst said the market remains firmly underpinned amid bullish long range prospects for global vegoils.

 

July oil share ended at 44.71% and the July crush ended at 63 1/2 cents.

 

In soymeal trades, Fimat bought 5,500 July, while Bunge Chicago sold 1,000 July. Speculative fund buying was estimated near 7,000 contracts.

 

In soyoil trades, Fimat bought 900 July, Bunge Chicago, Citigroup and UBS Securities each bought 500 July. Sellers were scattered across various commission houses. Speculative fund buying was estimated at 2,500 contracts.