July 7, 2006

 

CBOT Soy Review on Thursday: Rallies to 7-week high; speculative buys, weather

 

 

Chicago Board of Trade soybean futures ended sharply higher Thursday, rallying to 7-week highs on speculative buying and short covering as weather concerns enticed traders into adding risk premium back in the market.

 

July soybeans ended 14-cents higher at US$6.08 1/2, November soybeans finished 14 1/4-cents higher at US$6.35 1/4, December soymeal settled US$2.80 higher at US$181.50 a short tonne, while December soyoil ended 79 points higher at 28.17 cents a pound.

 

The market remains speculative driven, and with drier weather outlooks for dry areas of the soybean belt, sellers ran for cover as prices catapulted near two-month highs, analysts said.

 

The supportive theme was consistent from the outset, with the weather uncertainties providing the fundamental spark to flush out some shorts, with the ability of the November contract to eclipse overhead resistance levels accelerating the advances, traders add.

 

"We are not seeing much of a chance of substantial relief in the next couple of weeks for areas in the western Midwest suffering from moisture deficits," said Joel Widenor, meteorologist with Cropcast Weather Services.

 

The latest weather models are pointing to drier conditions in the 6-10 day and 11-15 day weather outlooks, but the temperatures are quite a bit cooler than previous forecasts, Widenor said. The forecast models remain inconsistent on long range views, but there isn't a lot of confidence that the corn belt will see any stressful heat in the next two weeks, he added.

 

The U.S. Department of Agriculture is scheduled to release its weekly export sales report Friday at 7:30 a.m. CDT. Analyst forecast soybean commitments in a range of 200,000 to 400,000 metric tonnes. Soymeal sales are seen falling in a range of 65,000 to 125,000 metric tonnes and soyoil commitments are expected in a range of zero to 6,000 tonnes.

 

In pit trades, ABN Amro bought 1,200 November, Man Financial bought 2,000 November, RJ O'Brien bought 1,000 November, Goldenberg Hehmeyer bought 700 November, with JP Morgan, Rand Financial and Rosenthal each buying 500 November. Speculative funds were estimated buyers of between 7,000 and 8,000 contracts.

 

On the sell side, RJ O'Brien sold 500 November, FCStonnee, Fimat and Man Financial each sold 300 November.

 

South American soybean futures ended higher, with the July future settling 15-cent higher at US$6.28.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board Thursday, rallying to the upside in unison with soybeans. Soyoil futures were the clear leader of upside movement in the products once again, with the active December contract soaring to a new contract high. Speculative led buying continues to fuel upside movement, with bullish enthusiasm associated with future demand for biodiesel amid rising crude oil prices remains a spark to attract buyers, analysts said.

 

Soymeal futures rallied higher, following in the footsteps of soybeans. However, the market continued to loose product share to soyoil over the course of the day, as the absence of underlying fundamental support has kept the market in the role of a follower, trader said.

 

July oil share ended at 43.63%, and the July crush ended at 75 1/4 cents.

 

In soymeal trades, Man Financial bought 500 December, Calyon Financial bought 400 December and Bunge Chicago bought 300 December. Sellers were scattered among various commission houses.

 

In soyoil trades, Fimat bought 1,000 December, with Citigroup, O'Connor and RJ O'Brien featured buyers as well. Sellers were scattered among various commission houses. Speculative funds were estimated buyers of 3,000 contracts.