September 16, 2006

 

CBOT Soy Review on Friday: Ends higher on technical buying

 

 

Chicago Board of Trade soybean futures ended moderately higher Friday, extending their recovery from prior losses on technically motivated buying.

 

November soybeans finished 4 1/2 cents higher at US$5.49 3/4. December soymeal settled US$2.80 higher at US$162.60 per short tonne, while December soyoil ended 20 points lower at 25.06 cents a pound.

 

Speculative-led buying fueled the gains, as technical buy stops were uncovered once active contracts took out large resistance at a down trend line resting above the market, said Mike Zuzolo, analyst with Risk Management Commodities Inc.

 

The technical buying helped extend the market's recovery from contract lows, as futures attempt to find stability with bearish features seen as adequately factored into prices, analysts added.

 

Helping to stimulate price strength was signs of a technical bottom in soymeal, a midday bounce in soyoil and concerns over the potential for frost to emerge in the northern Midwest next week, Zuzolo added.

 

Meanwhile, firm cash prices continue to provide underlying support as farmers remain tight-fisted with supplies amid current price levels. Nevertheless, the gains are seen as short-term advances, as bearish fundamentals continue to loom largely over the market, a CBOT trader said.

 

The DTN Meteorlogix forecast calls for temperatures in the Midwest to turn sharply cooler as the weekend continues, and finally reach borderline frost values by Tuesday and Wednesday of next week. Low temperatures will drop into the 30s Fahrenheit in South Dakota, Minnesota and Wisconsin, and upper 30s Fahrenheit in northern Iowa and northwestern Illinois. The occurrence of these temperatures will be brief and accompanied by some brisk winds, so the threat of frost damage to crops is quite low.

 

In pit trades, ABN Amro and Rand Financial each bought 1,000 November, Calyon Financial bought 1,800 November, Man Financial bought 600 November. Speculative fund buying was estimated at 5,500 contracts. Sellers were widely scattered among various commission houses.

 

Day session volume for soybeans on the e-CBOT platform totaled 21,287 contracts. - South American soybean futures ended higher, with the November future settling 5 cents higher at US$6.00.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed Friday, with soymeal bouncing higher in unison with soybeans. Soymeal futures were buoyed with technical buying helping rally futures to one-week highs. The market has displayed signs of achieving a technical bottom, with the most-active December contract finding strength after successfully climbing above its 10-day and 20-day moving averages, Zuzolo said. Good underlying demand and the continued correction in soyoil/soymeal spread aided the sessions gains, traders added.

 

Soyoil futures ended lower following a two-sided session. The market mirrored the up and down movement of crude oil, as energy component of the market has a more dominant effect on prices than its food components, analysts said. The most-active December future consolidated within Thursday's price range, chopping around between the contracts 10-day and 20-day moving averages.

 

December oil share ended at 43.52%, and the November/October crush ended at 77 cents.

 

In soymeal trades, buyers and sellers were wisely scattered among various commission houses, with speculative funds estimated net buyers on the day of 1,500 contracts.

 

In soyoil trades, JP Morgan bought 800 December, Fimat bought 600 December, Citigroup bought 400 December, with ADM Investor Services and Iowa Grain each buyers of 300 December. Fimat sold 900 December, Citigroup sold 500 December and 500 March, Bunge Chicago sold 400 October and Rand Financial sold 400 December.