September 19, 2006

 

CBOT Soy Review on Monday: Extends price recovery on technical buying

 

 

Chicago Board of Trade soybean futures ended higher Monday, extending their recovery from contract lows set in the previous week.

 

November soybeans finished 3 1/4 cents higher at US$5.53. December soymeal settled US$2.50 higher at US$165.10 per short tonne, while December soyoil ended 11 points lower at 24.95 cents a pound.

 

Technically motivated buying fueled the session's gains, with follow- through momentum from Friday's weekly high close as well as the market's ability break a six-week downtrend buoying speculative buying, said Mike Zuzolo, senior analyst with Risk Management Commodities Inc. in Lafayette, Ind.

 

Continued strength in soymeal, support from outside markets and lingering concerns over harvest delays and the potential for a midweek frost in the Midwest provided additional support to attract short covering interest, traders added.

 

The theme was consistent from the outset, with ideas the market's bearish features are adequately factored into prices, leaving opening the door for futures to extend their bounce, said a CBOT broker.

 

The DTN Meteorlogix forecast said rainfall Monday of up to one inch in the eastern and southeastern Midwest will give way to mainly dry conditions Tuesday and Wednesday. The second major rain system of the week moves into the western belt Thursday and Friday, and into eastern areas Friday and Saturday. Rainfall will range up to 1 1/2 inches, with locally heavier amounts. Almost the entire Midwest will be under this rainfall.

 

The eastern Midwest will turn much cooler Tuesday and Wednesday, with lows dipping into the 30s to low-40s Fahrenheit. Some frost or light freezing is expected in the Dakotas, Minnesota, northern Iowa and Wisconsin. This persistent wet and cool weather pattern will delay harvest progress due to slow ripening and dry-down of crops, and muddy field conditions, Meteorlogix reports.

 

In pit trades, Rand Financial and Man Financial each bought 700 November, Calyon Financial, Citigroup and JP Morgan each bought 300 November. Speculative fund buying was estimated at 2,500 contracts.

 

ABN Amro sold 1,300 November and Man Financial sold 500 November.

 

Day session volume for soybeans on the e-CBOT platform totaled 16,440 contracts.

 

South American soybean futures ended higher, with the November future settling 3 cents higher at US$6.03.

 

 

SOY PRODUCTS

 

Soy-product futures ended mixed Monday, with soymeal make solid strides higher. Soymeal futures rallied to two-week highs, buoyed by technical buying and speculative interest associated with the market's overdue bounce from previous lows, traders said. Fundamental support was generated from underlying demand, traders added. The most-active December future matched near-term highs, but its inability to breach resistance at its 50-day moving average applied pressure to exhaust upside movement, analysts said.

 

Soyoil futures ended lower after experiencing a two-sided session. Borrowed strength from energy markets provided support, but failed to generate enough momentum to overcome pressure from soyoil/soymeal spread unwinding, traders said.

 

December oil share ended at 43.04%, and the November/October crush ended at 78 cents.

 

In soymeal trades, Iowa Grain bought 1,000 December and 1,000 October, ADM Investor Services and O'Connor bought 800 December, Fimat and Man Financial each bought 500 December. Sellers were scattered among various commission houses. Speculative fund buying was estimated at 4,500 contracts.

 

In soyoil trades, buyers and seller were scattered among various commission houses, with Citigroup and Tenco each buying 500 December, Fimat bought 400 December. Citigroup sold 300 December.