June 17, 2006

 

CBOT Soy Review on Friday: Ends on highs; speculative buys buoy

 

 

Chicago Board of Trade soybean futures ended higher Friday, finishing on its highs amid end of the week short-covering and supportive outside influences.

 

July soybeans ended 7 3/4 cents higher at US$6.00 1/4, July soymeal settled US$1.80 higher at US$180.90 a short tonne, while July soyoil ended 4 points higher at 24.86 cent a pound.

 

The market held a firm tonnee over the course of the day, as traders took the opportunity to square up positions ahead of the weekend, as market shorts remained fearful of volatile price action on Monday if forecasted rains fail to impress during the weekend, analysts said.

 

Market shorts weren't willing to take on added risk going into the weekend in case the weather changes, said a CBOT commission house broker.

 

Market technicians were encouraged by the July contracts ability to settle above the psychological US$6.00 per bushel level, but with near term and long term midday weather forecasts increasing the chances for rain into next week, traders remain cautious of anticipating any sustainable upside momentum.

 

Meanwhile, supportive outside influences and positive attitudes associated with smaller private acreage estimates for soybeans managed to provide underlying strength to aide the day's price strength, analysts added.

 

The DTN Meteorlogix forecast calls for a slow-moving cool front in the central U.S. to bring rainfall of up to two inches to central Kansas south to central Oklahoma, and more than one inch of rain from central Nebraska north into the eastern Dakotas, western Minnesota and northwestern Iowa. Southwestern Plains and the southwestern Midwest (northwest Missouri, southeast Nebraska, northeast Kansas) will receive lesser amounts of rain; totals of mostly one-half inch maximum.

 

In the western Midwest, rainfall from the Nebraska-South Dakota border south to Interstate 70 in Kansas and Missouri will be very important. This sector of the Midwest has had very little precipitation recently. There are reports of corn plants falling over from strong winds due to a lack of proper root development due to the dry conditions. Eastern Midwest areas will have rains of up to one-half inch during the next five days. These lighter rains will not be as crucial to the soil moisture situation as farther west, due to recent moderate to heavy rains, Meteorlogix said.

 

In pit trades, Tenco and UBS Securities each bought 500 November, Rand Financial bought 400 July and 400 November, and Shatkin Arbor bought 300 November. Commodity fund buying was estimated between 1,000 and 2,000 lots.

 

On the sell side, UBS Securities sold 1,000 November and Rand Financial sold 300 November.

 

South American soybean futures ended higher, with the July future settling 13 1/2-cent higher at US$6.28.

 

 

SOY PRODUCTS

 

Soy product futures ended higher Friday, following the supportive tonnee in soybeans. Soymeal futures ended firm, buoyed throughout the day on spillover strength from soybeans and spreading between the soy products.

 

Soyoil futures ended Friday's session with modest gains, rebounding from earlier declines on late spillover strength from soybeans. Futures were on the defensive for most of the day, with the biodiesel aspect of soyoil dragging prices lower in tune with declines in crude oil futures.

 

July oil share ended at 40.73%, and the July crush ended at 71 1/4 cents.

 

In soymeal trades, JP Morgan bought 900 July, FCStonnee sold 300 September, 400 October and 600 December.

 

In soyoil trades, Citigroup bought 700 July, JP Morgan bought 300 July, Calyon Financial sold 300 December, JP Morgan sold 300 July, Rand Financial sold 900 December. Speculative funds were estimated net sellers on the day.