July 29, 2006

 

CBOT Soy Review on Friday: End up on minor tech bounce, weather

 

 

Chicago Board of Trade soybean futures ended Friday's session posting moderate gains, staging a minor bounce from recent declines on technical buying and Midwest weather concerns.

 

August soybeans ended 2 1/2-cents higher at US$5.76 1/2, November soybeans finished 3-cents higher at US$5.98. December soymeal settled US$1.30 lower at US$169.40 a short tonne, while December soyoil ended 54 points higher at 27.31 cent a pound.

 

The market was supported by speculative short-covering as traders evened up a few positions ahead of the weekend amid concerning heat in the Midwest and ideas recent declines were overdone, analysts said.

 

The theme was consistent from the outset, with futures consolidating as a lack of follow through momentum held prices in a narrow range, with end of the week and month positioning a supportive measure as well.

 

Meanwhile, sizzling weekend Midwest temperatures are expected to send heat indexes to triple digit levels. The heat threats were an underlying force to keep sellers hesitant of pressing the market, traders added.

 

Hot temperatures will engulf the U.S. Midwest through Tuesday, with 80% of the corn-belt outside of the northern Midwest expected to have extremely limited chances of precipitation through early next week, said John Dee, meteorologist with Global Weather Monitoring in Lake Linden, MI.

 

A front moving into the northwestern Midwest Tuesday and passing through the eastern Midwest by Thursday, will send temperatures back down to seasonal levels, Dee said. The front will also bring 1/3 of an inch to 1 inch rain showers to over 70% of the belt during this period, Dee added.

 

In other news, analysts expect deliveries against the August soybean contract to fall within a range of 500 to 2,000 lots, with most analysts leaning toward a range of 500 to 1,000 lots. Soyoil delivery notices are expected in a range of 1,500 to 4,000 contracts, while soymeal deliveries are seen between zero and 300 lots. First notice day for August futures is Monday.

 

In pit trades, JP Morgan bought 1,000 November, Fimat bought 400 November. On the sell side, Man Financial sold 600 November, JP Morgan sold 400 November and Calyon Financial and Citigroup each sold 200 November.

 

South American soybean futures ended higher, with the August future settling 1 ½ cent higher at US$6.26 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended Friday's session mixed, with soyoil regaining its dominance. Soyoil futures rekindled upward strength, bouncing back from prior declines on technical buying and lingering enthusiasm related to future soyoil demand for biodiesel, analyst say. Nevertheless, the gains were more consolidative in nature, with advances aided by technical buys once the active December futures pushed through its 10-day moving average.

 

Soymeal futures ended with light declines, relinquishing product share to soyoil on soyoil/soymeal spreading. The absence of fresh fundamental news left futures drifting on product spreading, trader said.

 

August oil share ended at 44.62%, and the August crush ended at 74 1/4 cents.

 

In soymeal trades, Fimat and RJ O'Brien each bought 300 December, with Fimat a seller of 300 December.

 

In soyoil trades, Man Financial bought 1,500 December, O'Connor bought 1,200 December, Fimat bought 600 December, JP Morgan and Calyon Financial each bought 500 December, Citigroup bought 400 December. Speculative fund buying was estimated at 5,000 contracts. Sellers were scattered among various commission houses.