August 24, 2007

 

CBOT Soy Review on Thursday: Extends up trend on crop lssues, technical buys

 

 

Chicago Board of Trade soybean futures ended higher again Thursday, continuing its bounce from recent lows on weather related crop issues and technically inspired buying.

 

September soybeans settled 10 3/4 cents higher at US$8.42, and November soybeans finished 11 1/4 cents higher at US$8.58 1/4. September soymeal settled US$3.10 higher at US$232.30 per short tonne, and December soymeal settled US$3.00 higher at US$239.60. September soyoil ended 9 points higher at 35.29 cents a pound, and December soyoil finished 16 points higher at 35.98.

 

"It's the same story, traders are adding premium to the market amid the uncertainties of yield and production in flooded upper Midwest fields as well as heat stressed areas of the southern soybean belt," a CBOT floor analyst said.

 

Technically inspired buying was a key contributor in the advances as well, with prices boosted by bullish momentum attributed to the November contract climbing above nearby technical resistance, analysts added. Nevertheless, the inability of the market extend advances once prices approached major moving average resistance at the November futures' 50-day moving average managed to cap upside movement, traders said.

 

However, the market still managed to post double digit gains, with supportive weekly export sales and crop uncertainties allowing futures to distance itself from a pull back in wheat and corn futures, a trader added.

 

The DTN Meteorlogix weather forecast calls for widespread rain and thunderstorms Thursday through Friday in the northern sector of the Midwest. Rainfall totals will approach two and a half inches, with locally heavier amounts, in Nebraska, Iowa, northern Missouri and southeast Minnesota. Rains of more than an inch will move across Wisconsin, Michigan, northern and central Illinois, northern Indiana and northwestern Ohio, Meteorlogix said.

 

Relentless heat and drought continue to bake the Delta and the southeastern U.S. Temperatures of 100 Fahrenheit are in store for Thursday in southwestern Illinois, and south through the entire Delta. Only slight cooling is in store during the weekend. A few showers will develop in the Ohio Valley; however, the Delta will have only isolated thundershowers. The overall weather pattern of hot and potential crop-withering dryness remains in effect over this sector of the main U.S. crop areas, Meteorlogix forecasts.

 

In other news, crop scouts on the eastern leg of the Pro Farmer Midwest Crop Tour Thursday saw very good soybean crops as they toured several southern Iowa counties. The group found an average pod count of 1,146 pods in four fields.

 

On the western leg of the tour, scouts said soybean crops are showing variability in southern Minnesota Thursday. In the five fields surveyed along one route, soybean pod counts ranged from 600 to 969.

 

In pit trades, ADM Investor Services, JP Morgan, Fortis, Fimat, and Penson GHCO each bought 1,000 November, and MF Global bought 800 November. Fimat, UBS Securities and MF Global each sold 1,000 November. Speculative fund buying was estimated at 7,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, with soymeal continuing to grab product share. Soymeal futures ended higher, rallying instep with soybeans. The market was buoyed by speculative and commercial buying amid solid world feed demand and bullish technical momentum, analysts said. The ability of the most active December contract to hold above major moving average support provided confidence to bullish traders, analysts added.

 

Soyoil futures ended higher, but lost ground to soymeal on spreads, with the exhaustion of buying as prices challenged resistance at the December futures 100-day moving average keeping a lid on prices, analysts said. Nevertheless, supportive Census stocks, and weekly export sales data provided strength to keep a floor under prices, analysts added.

 

December oil share ended at 42.88% and the September crush ended at 57 1/4 cents.

 

In soymeal trades, Tenco bought 1,000 December and Calyon Financial bought 500 December. Sellers were lightly scattered among various commission houses. Speculative funds were estimated buyers of 2,000 lots.

 

In soyoil trades, Fimat bought 800 December, JP Morgan bought 500 December, and Bunge Chicago bought 500 December and 500 May. Tenco sold 800 December, and Citigroup sold 300 December.