September 20, 2007

 

CBOT Soy Review on Wednesday: Soybeans end up on late short covering

 

 

Chicago Board of Trade soybean futures ended Wednesday's session posting modest gains, rebounding from earlier declines on late short covering as bullish fundamental outlooks continue to overshadow near-term overbought signals, analysts said.

 

November soybeans settled 1 1/2 cents higher at US$9.71. October soymeal settled US$0.50 higher at US$266.90 per short tonne, and December soymeal settled US$0.50 lower at US$272.20. October soyoil ended 20 points lower at 39.28 cents a pound, and December soyoil finished 19 points lower at 39.70.

 

The market came under pressure from speculative profit taking over the course of the day, but the inability of the market to attract follow-through selling near the lows uncovered speculative and commercial buying, analysts said.

 

Overbought conditions and ideas the market has put in an interim high weighed on prices initially. Nevertheless, the bullish fundamental makeup of the market refuses to let sellers become aggressive, with tightening world supplies, growing global demand and the need to keep prices at levels that will stimulate increased soybean plantings in the southern hemisphere remaining underpinning features, analysts added.

 

Otherwise, futures had little fresh news to direct prices, but worries over dry conditions in parts of Brazil delaying some early plantings continues to provide mild support, a CBOT floor broker said. The start of the fall harvest is applying pressure to limit upside moves as well, he added.

 

The DTN Meteorlogix Weather Service forecast said Brazil's largest soybean-producing state, Mato Grosso, remains in the grip of hot and dry weather. There is no sign of any rainfall developing in northern Mato Grosso during the next 10-15 days. Any early planting of soybeans in northern Mato Grosso during the latter half of September will not take place this year. Current indications point to the dryness persisting at least into early October.

 

Meanwhile, some farmers in Brazil's top soy-producing state of Mato Grosso started planting their soybean crops Tuesday, after the first rains in weeks. Approximately 30 millimeters of rain fell in a few areas around Sapezal, prompting a spattering of eager producers to seed their fields. The climate has been uncharacteristically dry for this time of year and there are no guarantees the scattered showers over the weekend will continue, according to the local Somar weather service.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EDT. Analysts predict soybean sales of 300,000 to 700,000 metric tonnes. Soymeal sales are seen in the 40,000- to 150,000-metric-tonne range, and soyoil sales are pegged to fall within a range of none to 10,000 tonnes.

 

In pit trades, Fimat bought 600 November, Rand Financial bought 700 November, and RJ O'Brien bought 300 November. Fimat sold 600 November, UBS Securities sold 400 November, and JP Morgan, MF Global, and Rand Financial each sold 300 November. Speculative fund selling was estimated near 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal setting new contract highs. Strong global feed demand remains a bullish influence for soymeal futures, analysts said. The most-active December future rose to a new high, with technical support adding strength to keep speculative buyers enthused, analysts added.

 

Soyoil futures ended lower, succumbing to speculative profit taking from its recent run to 23 year highs. Overbought market conditions, spillover pressure from overnight declines in Malaysian palm oil futures and adjustments in the meal/oil spread served as catalysts for the declines, analysts said.

 

December oil share ended at 42.17% and the November/October crush ended at 48 1/4 cents.

 

In soymeal trades, MF Global bought 500 December, JP Morgan bought 300 October and UBS securities bought 300 December. UBS Securities sold 300 December.

 

In soyoil trades, Citigroup bought 500 December, with JP Morgan a seller of 300 December. Speculative fund selling was estimated near 2,000 lots.