September 8, 2006

 

CBOT Soy Review on Thursday: Higher, bounces back from early losses

 

 

Chicago Board of Trade soybean futures ended moderately higher Thursday, bouncing back from earlier declines on technical buying and spillover support from the neighboring corn market.

 

September soybeans ended 4 1/2 cents higher at US$5.38 1/2, and November soybeans finished 3 1/4 cents higher at US$5.50. December soymeal settled US$1.60 higher at US$163.20 a short tonne, while December soyoil ended 6 points lower at 24.83 cents a pound.

 

The market has been looking for a reason to pop higher, and Thursday's corn strength gave participants the excuse to generate an oversold rally, said John Kleist of Top Third Ag Marketing in Chicago.

 

Futures had become very cheap in comparison to other grains and after Wednesday's late slump followed by an early drop to new move lows, the market was overdue to find some stability, Kleist added.

 

November futures slid to their lowest level in 19 months before the exhaustion of selling interest near the the contract low enabled prices to edge higher.

 

Nevertheless, the market continues to face an uphill battle of sustaining upside movement as bearish crop production outlooks and ample world inventories make it tough to hold rallies, Kleist said.

 

Light underlying support was generated from rumors of export demand emerging on price breaks as the market continues to try and price itself into consumption, analysts added.

 

On tap for Friday, U.S. Department of Agriculture is scheduled to release its weekly export sales report at 7:30 a.m. CDT. Analysts anticipate export commitments to fall within a range of 400,000 to 600,000 metric tonnes.

 

Meanwhile, the average of analysts estimates taken from a survey compiled by Dow Jones Newswires for 2006-07 U.S. soybean production based on conditions as of Sept. 1 pegs the crop at 3.093 billion bushels. The estimates ranged from 2.994 billion bushels to 3.192 billion bushels. The 2005-06 ending stocks were pegged at 503 million bushels from estimates that ranged from 485 million to 523 million bushels. The average of estimates pegged 2006-07 ending stocks at 566 million bushels. The estimates ranged from 460 million to 696 million bushels.

 

USDA is scheduled to release its September production report at 7:30 a.m. CDT (1230 GMT) on Tuesday.

 

Meanwhile, the DTN Meteorlogix forecast calls for thundershowers to spread from north to south across the region beginning Friday and continuing through the weekend. Rainfall will total up to 1 1/2 inches. Heavy rain is especially possible for southern Iowa, Missouri and western Illinois during the weekend.

 

South American soybean futures ended lower, with September futures settling 13 1/2 cents lower at US$5.80 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed Thursday, with soymeal pushing higher after establishing new contract lows earlier in the day. Soymeal was buoyed by spillover strength from a recovery in soybeans with technical buying surfacing after speculative selling pressure waned after midday, traders said.

 

Soyoil futures ended lower, continuing its recent retreat, as price pressure in the energy sector has extracted biodiesel enthusiasm from prices, analysts said. Speculative-led selling served as the catalyst to press prices into negative territory, traders added.

 

September oil share ended at 43.18%, and the September crush ended at 79 1/2 cents.

 

In soymeal trades, buyers were widely scattered among various commission houses. RJ O'Brien sold 800 December, Man Financial sold 600 December, Rand Financial sold 500 December and Calyon Financial and Prudential Financial each sold 400 December.

 

In soyoil trades, buyers were scattered among various firms, with Bunge Chicago a featured buyer of 1,500 December. UBS Securities sold 1,200 December, and Fimat sold 1,000 December.