July 25, 2007

 

CBOT Soy Review on Tuesday: Consolidates higher; technicals, wheat support

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, managing to consolidate after recent setbacks on borrowed strength from wheat, and technical buying related to oversold market conditions.

 

August soybeans settled 4 cents higher at US$8.20 1/4, and November soybeans finished 4 1/2 cents higher at US$8.45 1/2. August soymeal settled US$1.00 higher at US$215.40 per short tonne. August soyoil ended 12 points higher at 36.79 cents a pound.

 

The market was overdue for a consolidative bounce following heavy losses during the past week, analysts said.

 

Sharp gains in the neighboring wheat market provided spillover support for prices, with lower-than-expected weekly crop ratings providing a boost to aid the higher theme, analysts added.

 

Bullish longer-range supply outlooks coupled with the uncertainty of yield potential with the critical growth period for soybeans still ahead provided underlying strength as well, a CBOT floor trader said.

 

Nevertheless, Tuesday's price action was seen as only a minor bounce from oversold conditions, as favorable near- term weather conditions should keep a lid on upside movement, he added.

 

Futures traded inside days on technical charts, unable to muster any aggressive upside charge amid the absence of strong speculative fund buying, analysts said.

 

The DTN Meteorlogix forecast calls for an easing of concerns over hot weather damage to U.S. crops. Forecast model analysis shows a less-threatening appearance of hot upper-atmosphere high pressure during the final week of July.

 

In addition, periodic impulses moving across the central U.S. have demonstrated an ability to generate thunderstorms with significant rainfall - as an example, moisture of up to one inch or greater developed from northeastern to southwestern Iowa Monday. These periodic showers will help limit the development of intense heat in the western Midwest. In the eastern Midwest, dominant high pressure in eastern Canada, which has been a key feature during the growing season so far, continues to bring favorable temperatures to row crops, Meteorlogix reports.

 

In pit trades, Fimat and Rand Financial each bought 400 November, and JP Morgan bought 300 January. Sellers were widely scattered among various commission houses. Speculative fund buying was estimated at 2,500 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mostly higher, with soymeal the upside leader.

 

Soymeal futures were buoyed by strength from soybeans, with technically inspired buying underpinning the market, analysts said. Soymeal was a bit overdone on the downside, and with the August contract holding support at its 200-day moving average, prices settled into a consolidative theme, analysts added.

 

Soyoil futures ended mostly higher, after a two-sided session. Spillover strength from soybeans and Malaysian palm oil futures supported prices, analysts said. However, weakness in crude oil futures and adjustments in the meal/oil spread applied pressure to produce two-sided action, analysts added.

 

August oil share ended at 46.06% and the August crush ended at 58 1/4 cents.

 

In soymeal trades, ADM Investor Services and Man Financial each bought 300 December, JP Morgan bought 1,000 July. Fimat and RJ O'Brien each sold 600 December, and Rand Financial sold 500 December. Speculative fund buying was estimated at 2,500 lots.

 

In soyoil trades, Bunge Chicago bought 300 December, Citigroup bought 300 September and Iowa Grain bought 400 December. JP Morgan sold 1,300 July, Fimat sold 300 December, Fortis sold 500 September, Iowa Grain sold 300 August, and UBS Securities sold 300 September.