July 19, 2007

 

CBOT Soy Review on Wednesday: Higher; technical bounce, longer range weather

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, staging a technical bounce from recent declines amid concerns surrounding longer range weather outlooks, analysts said.

 

August soybeans settled 17 1/2 cents higher at US$8.51 1/4, and November soybeans finished 16 cents higher at US$8.76 1/2. August soymeal settled US$4.40 higher at US$226.60 per short tonne. August soyoil ended 58 points higher at 37.50 cents a pound.

 

The market bounced higher from the outset, in a consolidative recovery amid ideas recent losses were overdone, particularly with the uncertainty of weather ahead of the soybean crop's critical pod filling growth stage, analysts said.

 

Technical buying was featured, with bargain hunting after a recent plunge added support as well, analysts added. Meanwhile, traders said the exhaustion of speculative selling that pressured prices recently provided price strength, with traders unwilling to aggressively press the market after a nearly 90-cent decline in soybean prices during the previous two trading days, a CBOT floor analyst said.

 

Otherwise, a quiet news front kept a subdued tonnee in the market, with futures in more of a consolidation mode as the trade awaits new weather outlooks, analysts added.

 

The DTN Meteorlogix forecast calls for rainfall of up to one-and-one-half inches in the Midwest before ending Thursday. The end of the week and the weekend will bring drier weather. Thunderstorms and cooler temperatures during the next few days will help to ease stress to reproductive soybeans in the western Midwest. Rainfall is most likely to total no more than one-half inch. Following this round of rainfall, drier weather will return to the western Midwest. This occurrence bears watching, especially in Minnesota and western Iowa where it has been drier than normal during recent weeks.

 

Dry areas of the eastern Midwest also have some rainfall to look forward to in the next few days. Precipitation in northern Indiana and northern Ohio will range up to one inch. The track of storms over the eastern Midwest will be important; recently, rainfall has tended to track to the south of the dry areas ringing the Great Lakes, Meteorlogix reports.

 

U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT Thursday. Analysts predict soybean sales of 75,000 to 300,000 metric tonnes. Soymeal sales seen in the 40,000 to 150,000 metric tonne range, and soyoil sales are pegged to fall within a range of zero to 10,000 tonnes.

 

In pit trades, Tenco and Stern each bought 300 November, and UBS Securities bought 400 July. Speculative fund buying was estimated at 3,000 lots. On the sell side, JP Morgan sold 1,200 November, Fimat and Rand Financial each sold 500 November and Fortis sold 300 November.

 

 

SOY PRODUCTS

 

Soy product futures rebounded from recent declines in unison with soybeans. The influence of a recovery bounce in soybeans served as the catalyst for the higher theme in the products, analysts said. Consolidative activity was seen in both markets, but soyoil did find technical support, with the nearby August contract briefly filtering into a chart gap left from Monday, analysts added.

 

August oil share ended at 45.28% and the August crush ended at 59 3/4 cents.

 

In soymeal trades, ADM Investor Services bought 300 August, JP Morgan bought 1,000 August, UBS Securities bought 400 August and 500 December, RJ O'Brien and Rand Financial each bought 300 December. JP Morgan sold 800 August, Fimat sold 800 December, and Iowa Grain sold 500 September and 400 December. Speculative fund buying was estimated at 4,000 lots.

 

In soyoil trades, Bunge Chicago bought 300 December and Iowa Grain bought 500 December. Fimat sold 300 December and Iowa Grain sold 300 August. Speculative funds were estimated buyers of 2,000 lots.