June 6, 2007
CBOT Soy Review on Tuesday: Rallies to new highs as speculators buy
Chicago Board of Trade soybean futures ended higher Tuesday, rallying to new contract highs as supportive long range fundamentals and technical momentum continued to stimulate speculative buyers.
July soybeans settled 12 1/2 cents higher at US$8.28 1/4, and November soybeans finished 13 cents higher at US$8.59 1/4. July soymeal settled US$3.20 higher at US$223.60 per short tonne. July soyoil ended 52 points higher at 36.27 cents a pound.
Supportive long range fundamentals remain a constant in the market, but when you add weather concerns to the equation, the door is open for a speculative push higher, said Tim Hannagan, analyst with Alaron Trading in Chicago.
Weather models were in agreement Tuesday, with parched areas of the eastern Midwest, southeast US and Delta poised for warmer and drier conditions, said Hannagan. Only light to marginal precipitation is expected in the region this week, Hannagan added.
Price strength in world vegoil markets, strong technical chart signals and the market's underlying mission of enticing South American producers to plant more soy acres next crop year kept buyers in command of prices, analysts added.
Otherwise, a quiet news front left technical factors in play, with futures easily sustaining price strength over the course of the day. However, futures inability to challenge resistance at contract highs set in the overnight session attracted scale down selling to cap upside potential, analysts added.
Meanwhile, the DTN Meteorlogix weather forecast said rainfall will total up to one-half inch in the Midwest for the balance of this week. Temperatures will warm up into the range of the low 90s Fahrenheit in the Midwest later this week, notably in the eastern Midwest. In general, corn and soybean weather will be favorable; however, eastern Midwest soil moisture continues to be drawn down because of recent dry conditions this crop year.
Crop areas of the Mississippi Delta region have some stressful weather ahead during the balance of this week. A few very light rain showers developed Monday, with rainfall mostly less than one-quarter inch. The rest of this week will be dry with only isolated showers. Temperatures will steadily climb to above normal values, putting high temperatures in the range of 91-95 Fahrenheit, Meteorlogix forecasts.
In pit trades, Citigroup bought 1,000 July, ADM Investor Services and Fortis each bought 500 July, Man Financial and UBS Securities each bought 500 July and 300 November. Tenco sold 1,300 July, Penson GHCO sold 700 July, and RJ O'Brien and Rand Financial each sold 500 July. Speculative fund buying was estimated between 6,000 and 7,000 contracts.
SOY PRODUCTS
Soy product futures climbed in step with soybeans, with soyoil setting new contract highs and soymeal carving out new 2-month highs. Soyoil futures were the star of the session, soaring to new 23 year highs on the backs of global vegoil price strength amid an expanding world biofuel industry, analysts say. Technically motivated buying was a feature, with spillover from new record high Malaysian palm oil futures prices laying the groundwork for the day's gains, analysts added.
Soymeal futures were buoyed by a combination of speculative and technical buying, with spillover from soybeans fueling the gains. However, mild soyoil/soymeal spreading limited upside movement, CBOT traders said.
July oil share ended at 44.78% and the July crush ended at 62 3/4 cents.
In soymeal trades, speculative were estimated net buyers on the day, with Fimat and Iowa Grain featured buyers. Tenco sold 800 July, Fimat and RJ O'Brien each sold 300 July and Penson GHCO sold 1,000 July.
In soyoil trades, Tenco bought 700 July, Fimat bought 500 July, and Bunge Chicago bought 400 July. Bunge Chicago sold 500 July and 300 August, ADM Investor Services sold 300 December, Rand Financial sold 500 July, and UBS Securities sold 400 July and 300 September. Speculative fund buying was estimated near 3,000 lots.
