September 14, 2006

 

CBOT Soy Review on Wednesday: Ends up; bounces back from contract lows

 

 

Chicago Board of Trade soybean futures ended Wednesday's session posting modest gains, bouncing back from contract lows on consolidative buying.

 

September soybeans ended 2 3/4 cents higher at US$5.30, November soybeans finished 2 cents higher at US$5.40 1/2. December soymeal settled unchanged at US$158.90 per short tonne, while December soyoil ended 27 points higher at 25.02 cents a pound.

 

The absence of any significant speculative selling interest opened the door for the gains, with talk of recent declines being a bit overdone helping underpin prices, analysts said.

 

The threat of frost or freezing temperatures moving into the northern Midwest next week provided mild support to keep would be sellers on the sidelines, said Dan Basse, president AgResource Cos. in Chicago.

 

Midday weather models look colder for Wednesday and Thursday of next week, with the potential for a frost or light freeze in northern Iowa, southern Minnesota and northwest Illinois possible, said Mike Palmerino, meteorologist with DTN Meteorlogix Weather Services.

 

Temperatures are seen dropping to couple of degrees on either side of 35 degrees Fahrenheit, but the likelihood of verifying that weather pattern at this point is uncertain, Palmerino added.

 

The supportive price theme was consistent from the outset, as the market has managed to consolidate after stumbling to contract lows Tuesday. The price strength was seen as more a reflection of exhausted selling pressure than any change in fundamental perspectives, analysts said.

 

Recent declines were a bit overdone, as downside pressure waned after satisfying a near-term technical objective of penetrating contract lows Tuesday, traders added.

 

Meanwhile, firm cash prices with farmer selling limited, a rebound in outside metals and energy markets provided psychological momentum to keep prices firm in quiet trade as well, analysts said.

 

Nevertheless, the weight of the second-largest projected U.S. soybean crop on record coupled with ample world inventories is seen maintaining a defensive theme to limit upside potential.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release its weekly export sales report, and the National Oilseed Processors Association is scheduled release its August soybean crush report 7:30 a.m. CDT. Thursday is also the last trading day for September futures.

 

In pit trades, buyers and sellers were widely scattered among various commission houses with speculative funds light net buyers on the day

 

Day session volume for soybeans on the e-CBOT platform totaled 14,202 contracts.

 

South American soybean futures ended higher, with the November future settling 2 1/2 cents higher at US$5.90 1/2.

 

 

SOY PRODUCTS

 

Soyoil futures ended higher across the board Wednesday, recovering from recent setbacks. The market bounced higher on a combination of speculative and commercial buying, benefiting from stable crude oil futures. A lot of people in the speculative sector are watching crude, and after recent long liquidation the market was overdue for a modest bounce, analysts said.

 

Soymeal futures ended narrowly mixed, garnering pressure from soyoil/soymeal spreading while spillover support from soybeans attracted consolidative buying from Tuesday's contract lows, analysts said.

 

September oil share ended at 43.72%, and the September crush ended at 85 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, Fimat bought 2,000 December, UBS Securities bought 1,000 December, Citigroup and Prudential Financial each bought 500 December. Bunge Chicago bought 300 October and 300 December. UBS Securities was a featured seller of 2,500 December. Speculative fund buying was pegged at 2,500 contracts.