September 6, 2006

 

CBOT Soy Review on Tuesday: Ends up; bounces from prior lows

 

 

Chicago Board of Trade soybean futures ended Tuesday's session posting moderate gains, bouncing from prior lows on technically inspired speculative buying.

 

September soybeans ended 2 3/4 cents higher at US$5.41 1/4, November soybeans finished 2 3/4 cents higher at US$5.54 1/4. December soymeal settled US$3.20 higher at US$164.60 a short tonne, while December soyoil ended 22 points lower at 25.10 cent a pound.

 

The combination of oversold market conditions and spillover support from soymeal and other grains attracted speculative buying to push prices through overhead resistance levels, analysts said.

 

The early price spike triggered short covering interest, as the market squeezed out a few weaker shorts from the market, said a CBOT commission house broker.

 

The market rallied to over one-week highs, with advances accelerating once prices eclipsed resistance at last week's highs, and the subsequent bounce through down-trend pressure at the November future's 10-day moving average, traders added.

 

However, after satisfying its early technical objectives, futures trimmed their gains, as a lack of follow-through buying at the highs coupled with bearish underlying fundamentals exhausted upside momentum.

 

Growing crop production estimates amid favorable weather conditions through the soybean crop's critical pod-filling stage as well as ample domestic and world supplies ahead of the U.S. fall harvest is seen limiting any upside moves in the near term, analysts added.

 

After the close, the U.S. Department of Agriculture is scheduled to release its weekly progress report, with analysts anticipating soybean crops rated in good to excellent condition to improve by one percentage point.

 

Meanwhile, the DTN Meteorlogix forecast said drier and warmer weather in the next few days will benefit filling to maturing cops in the Western Corn Belt, following weekend rains in the Midwest.

 

In pit trades, ABN Amro bought 1,500 November, Calyon Financial bought 1,000 November, Man Financial bought 700 November, JP Morgan bought 600 November and Prudential Financial bought 300 November. Speculative fund buying was estimated between 4,000 and 5,000 contracts. Sellers were scattered among various commission houses.

 

South American soybean futures ended higher, with the September future settling 6 1/4 cents higher at US$6.01 1/4.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal maintaining solid gains. Soymeal futures ended higher, but failed to sustain the strong advances produced earlier in the session. The market managed to gain product share on a combination of fundamental and technical strength, analysts said. Strength in cash meal prices, light deliveries against in the nearby future coupled with technically inspired buying helped active contracts propel through overhead chart resistance. The strength served as a catalyst to generate speculative short covering.

 

Soyoil futures ended lower, pressured by the unwinding of soyoil/soymeal spreads and sympathetic selling with declining crude oil futures, traders said.

 

September oil share ended at 43.36%, and the September crush ended at 81 1/4 cents.

 

In soymeal trades, Calyon Financial bought 1,200 December, Man Financial bought 1,000 December, Fimat bought 800 December and RJ O'Brien bought 400 December. Fimat sold 900 December, Bunge Chicago sold 500 October and JP Morgan sold 400 December. Speculative fund buying was estimated near 4,000 contracts.

 

In soyoil trades, buyers were scattered among various commission houses. On the sell side, Goldenberg Hehmeyer sold 800 December, Fimat sold 600 December, and Citigroup sold 300 December. Speculative fund selling was estimated between 1,000 and 2,000 contracts.