September 8, 2007
CBOT Soy Review on Friday: Up; rallies on outside market support
Chicago Board of Trade soybean futures ended higher Friday, leaping to double-digit gains on speculative-led buying.
September soybeans settled 13 cents higher at US$8.91, and November soybeans finished 12 3/4 cents higher at US$9.05 1/4. September soymeal settled US$4.60 higher at US$247.40 per short tonne, and December soymeal settled US$5.20 higher at US$254.40. September soyoil ended 20 points higher at 37.28 cents a pound, and December soyoil finished 17 points higher at 37.91.
Speculative fund buying fueled the market's rise, with the supportive influence of higher outside inflationary markets serving as the catalyst to inspire the buying push, said Jack Scoville, analyst with Price Futures Group in Chicago.
A sharply weaker U.S. dollar versus other major currencies following the release of U.S. employment data sent waves rippling through global markets, analysts said.
Futures had little fresh fundamental directives, allowing technical objectives to emerge as featured attractions, traders added.
The ability of the most active November futures to hold technical support beneath the market uncovered buying as well, with buy stops and short covering triggered once the contract pierced through resistance at the US$9.00 per bushel level, analysts said. Spillover support from a sharp bounce in wheat futures aided the bullish cause heading down the stretch, analysts added.
Meanwhile, looking forward traders are expected to begin to position themselves ahead of Wednesday's crop report and the start of Midwest harvest operations, analysts said.
The U.S. Department of Agriculture is scheduled to release its latest production, yield and supply and demand estimates Wednesday at 8:30 a.m. EDT. The average of analysts' estimates pegged 2007 soybean production at 2.650 billion bushels, up from the August figure of 2.625 billion. The average was from a range of 2.562 billion to 2.740 billion bushels. Ending stocks for 2006-07 were pegged at 561 million bushels from a range of 527 million to 578 million. The 2007-08 ending stocks were estimated at 217 million bushels from a range of estimates that span from 81 million to 322 million bushels.
The DTN Meteorlogix forecast calls for total rainfall of close to two inches across much of the central U.S. - from the Midwest through the Delta, and the central and southern Plains during the weekend. The impact of this moisture will be mixed. Some adverse weather for late filling soybeans is possible over the southern half of the Midwest and the Delta.
Meanwhile, a general air flow from northwest to southeast out of central Canada will produce colder weather through the central U.S. during next week. Temperatures may drop into the 30s Fahrenheit over the northern Midwest Wednesday or Thursday morning. This chilly weather is not expected to be damaging, but it does bear watching, Meteorlogix forecasts.
In pit trades, JP Morgan bought 600 November, Penson GHCO bought 500 November, Rand Financial bought 400 November, RJ O'Brien and FCStone each bought 300 November. Sellers were lightly scattered among various commission houses. Speculative fund buying was estimated at 6,000 contracts.
Soy Products
Soy product futures ended higher across the board Friday, bouncing in unison with soybeans.
The bullish impact of speculative buying associated with the strength in inflationary markets served as the catalyst to promote the higher tone, analysts said.
Fundamentally, the news front was quiet, but soyoil did garner mild support from supportive weekly export sales.
Nevertheless, soymeal continued to garner product share on meal/oil spreads, traders said.
December oil share ended at 42.70% and the September crush ended at 63 1/4 cents.
In soymeal trades, speculative funds were estimated buyers of 2,000 lots, with Fimat a buyer of 300 December and Bunge Chicago a seller of 300 December.
In soyoil trades, speculative funds were net buyers on the day. Rand Financial bought 300 December and Bunge Chicago sold 600 December.
