June 8, 2006
CBOT Soy Review on Wednesday: Rebounds higher on technical buying
Chicago Board of Trade soybean futures rebounded Wednesday, bouncing back from a two-day slide on technically induced buying interest.
July soybeans ended 3 1/2 cents higher at US$5.97, July soymeal settled US$1.20 higher at US$182.10 a short tonne, and July soyoil ended 8 points lower at 24.95 cent a pound.
The ability of active futures to hold underlying technical support brought momentum buyers back to soybeans, providing a technical boost as the market continues to suffer from a lack of supportive fundamental influences, said a CBOT commission house broker.
Two-sided activity was seen over the course of the day as the market attempted to stabilize from a two-day correction of prior gains, supported by speculative buying. Sympathetic selling in unison with the bearish influence of a general commodity-wide sell-off applied pressure.
However, underlying concerns over conflicting private weather forecasts for the Midwest have managed to limit outright selling, with the nearby July future finding support near its 10-day moving average US$5.89 3/4. This strength in the market coupled with the trimming of losses in outside metals markets enabled soybeans to extend to new session highs in late dealings.
Pre-placed buy orders were activated once the most-active July futures pierced through resistance at its 100-day moving average and then the US$6.00 per-bushel level, a psychological mark, traders said. Despite July futures' inability to settle above US$6.00, analysts say the market remains a reluctant bear, as speculative buyers remain eager to pounce on price breaks. Otherwise, positioning ahead of Friday's supply and demand report and a lot spreading amid the rolling of July positions were featured.
The DTN Meteorlogix weather forecast said conditions remain favorable for the development of corn and soybeans in the Midwest. Over the next five to 10 days periodic showers and thunderstorms will produce near- to above-normal rainfall in the western Midwest (west of the Mississippi River), and near- to below-normal rainfall in the eastern Midwest. Western Midwest crops could use additional precipitation, and the eastern Midwest will benefit by a drier trend. There will be some concern because of cool temperatures in Indiana, Michigan and Ohio, but that trend is not a problem at this point in the growing season, Meteorlogix said.
On tap for Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 7:30 a.m. CDT. Analyst forecast soybean commitments in a range of 100,000 to 350,000 metric tonnes. Soymeal sales are seen falling in a range of 60,000 to 125,000 metric tonnes and soyoil commitments are expected in a range of zero to 6,000 tonnes.
In pit trades, JP Morgan bought 1,000 July, Fimat bought 500 November, FCStonnee bought 300 November, and Man Financial and Fortis each bought 300 July.
On the sell side, ADM Investor Services and Merrill Lynch each sold 600 July, ABN Amro sold 1,000 November, and Rand Financial sold 700 July. South American soybean futures ended higher, with the July future settling 4 3/4 cents higher at US$6.12 3/4.
SOY PRODUCTS
Soy product futures ended mixed, with soymeal gaining product share versus soyoil. Soymeal futures climbed in unison with soybeans, underpinned by speculative and technical buying, and soyoil/soymeal spread unwinding.
Soyoil futures finished on the defensive, continuing to trade like an energy component, shedding speculative length in tune with the lower theme in crude oil futures, analysts said.
July oil share ended at 40.66%, and the July crush ended at 78 cents.
In soymeal trades, Fimat bought 800 July and Calyon Financial bought 400 July. O'Connor sold 500 December, JP Morgan sold 400 July and Calyon Financial sold 300 July.
In soyoil trades, Bunge Chicago bought 1,000 July and JP Morgan bought 1,000 July and 500 December. RJ O'Brien sold 1,000 July, Rand Financial and UBS Securities each sold 500 July.
