August 5, 2006

 

CBOT Soy Review on Friday: Up on light speculative buying, weather

 

 

Chicago Board of Trade soybean futures ended modestly higher Friday, underpinned by light speculative buying amid concerns over potential Midwest heat and dryness next week and underlying technical strength.

 

August soybeans ended 1 1/2-cent higher at US$5.77 1/2, November soybeans finished 1 1/2-cent higher at US$5.97. December soymeal settled US$1.10 higher at US$169.20 a short tonne, while December soyoil ended 13 points lower at 27.21 cent a pound.

 

The threat of warmer and drier weather conditions for pod filling soybeans in the central U.S. next week attracted short covering interest, with weaker shorts eliminating some risk heading into the weekend, analysts said.

 

Overall activity was fairly quiet, with higher-than-expected private crop estimates tempering upside momentum to keep futures hovering in narrow range for most of the day, traders added.

 

Futures were buoyed by weather concerns initially, but without any significant follow-through buying, the gains were quickly tempered as the market found limited support above the US$6.00-per-bushel level basis November, said a floor trader. Also, the fact that private crop estimates continue to come in above expectations has raised some doubts over significant drops in yields in next week's U.S. Department of Agriculture crop report, he added.

 

In other news, CBOT electronic trading was shut down from 9:30 a.m. to 12:00 p.m. CDT due software related issues. The active November contract traded 2,669 lots during the abbreviated session.

 

Meanwhile, DTN Meteorlogix Weather Service called for a return to above-normal temperatures and below-normal rainfall during the next week to 10 days, increasing the chances for some heat wave conditions to linger in the entire region going into the latter part of August.

 

This dry and very warm-to-hot weather trend will continue to deplete soil moisture and increase stress on filling corn and soybeans, Meteorlogix said. In the western Midwest, the greatest stress will be from central and southern Iowa west through eastern Nebraska and north into the eastern Dakotas. Eastern Midwest crop areas will have the greatest stress in some of the drier areas of western Illinois, Meteorlogix added.

 

In pit trades, buyers were scattered among various commission houses, with UBS Securities a buyer of 1,000 November. Light selling was reported, with UBS securities a featured seller of 1,000 November.

 

South American soybean futures ended higher, with August futures settling 1 1/2-cent higher at US$6.27 1/2.

 

 

SOY PRODUCTS

 

Soy product futures were mixed Friday, as a mild correction in the soyoil/soymeal spread kept the products on opposite sides of unchanged levels for most of the day. Soymeal futures ended higher, benefitting from spillover strength from soybeans and the unwinding soy product spreads, analysts said.

 

Soyoil futures stumbled lower, pressured by technical selling and borrowed momentum from weak crude oil futures. The energy component in the market tied to biodiesel enthusiasm continues to keep the price movement in energy futures a dominant influence on prices, analysts said.

 

August oil share ended at 44.72%, and the August crush ended at 72 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with RJ O'Brien a buyer of 300 December and Bunge Chicago a seller of 300 December.

 

In soyoil trades, Bunge Chicago bought 600 December, Man Financial was a seller of 1,000 December, and Citigroup and Fimat each bought 300 December. On the sell side, Calyon Financial, Fimat and JP Morgan each sold 400 December. Man Financial and RJ O'Brien each sold 300 December, with a host of commission house selling scattered among various firms.