September 15, 2007

 

CBOT Soy Review on Friday: Climb on frost fears, bullish trend

 

 

Chicago Board of Trade soybean futures ended higher Friday once again, rallying on the combination of frost concerns and bullish underlying fundamental and technical outlooks.

 

November soybeans settled 13 1/2 cents higher at US$9.54 3/4. October soymeal settled US$4.40 higher at US$260.00 per short tonne, and December soymeal settled US$4.30 higher at US$265.40. October soyoil ended 35 points higher at 39.52 cents a pound, and December soyoil finished 35 points higher at 40.02.

 

The fear associated with frost forecast for the upper tier of the Midwest - where late planted soybeans are still susceptible to damage - coupled with the need to push and hold prices at levels that will attract acres in South America as well as in the U.S. next year buoyed the market, said Tim Hannagan, analyst with Alaron Trading In Chicago.

 

The market effectively added some premium to prices. More support was generated from technical strength that uncovered speculative fund buying, analysts added.

 

Meanwhile, spillover support from strength in soyoil aided the theme, with active contracts briefly challenging contract highs before pre-weekend profit-taking surfaced to trim advances, analysts added.

 

Nevertheless, futures continued to consolidate inside Wednesday's wide trading range, as traders remain hesitant to aggressively push prices above new highs in the face of fall harvest, a CBOT floor broker said.

 

The DTN Meteorlogix Weather Service forecast calls for generally favorable weather conditions for row crop harvest in the U.S. Temperatures will be mostly above normal except for a quick spell of cold weather Friday night into Saturday morning. During the next week, the dry and open weather pattern continues across the entire central U.S. Harvest progress will be notable during the next 10 days.

 

Unseasonably cold weather during the next few days will bring some frost and freeze conditions to northern U.S. growing areas. Some minor damage is possible to late maturing soybeans. However, the impact of this cold snap looks to be very minimal due to the advanced stage of soybeans compared to average, Meteorlogix said.

 

In pit trades, ADM Investor Services bought 1,000 November, RJ O'Brien bought 700 November, and JP Morgan bought 500 November. Sellers were lightly scattered among various commission houses. Speculative fund buying was estimated at 5,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, with soyoil continuing its rise to new contract highs. Soyoil remains buoyed by tightening inventory outlooks, with bullish technical momentum and spillover strength from overnight gains in Malaysian palm oil futures setting the stage for the gains, analysts said.

 

Soymeal futures ended higher as well, feeding off the bullish theme circulating through the complex, with supportive global feed demand an underpinning feature, analysts said.

 

December oil share ended at 42.99% and the September crush ended at 63 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses. Speculative funds were buyers of 1,500 lots.

 

In soyoil trades, ADM Investor Services bought 400 October, 400 December, and 300 January, JP Morgan bought 300 December. FCStonnee sold 500 December. Speculative funds were estimated buyers of 2,500 lots.