September 21, 2006

 

CBOT Soy Review on Wednesday: Bounces higher as selling wanes

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, bouncing back from Tuesday's losses as selling interest waned at lower levels.

 

November soybeans finished 5 cents higher at US$5.49 1/4. December soymeal settled US$3.20 higher at US$165.80 per short tonne while December soyoil ended 4 points lower at 24.51 cents a pound.

 

The market is finding a tough time aggressively pushing prices to the downside at current levels, as bearish supply outlooks have been previously built into prices, said Dan Basse, president AgResource Co in Chicago.

 

The market recovered from early losses, finding support from ideas recent declines were a bit overdone, strength in outside markets and outlooks for a supportive demand profile, analysts added.

 

Soybeans have a heavy speculative short position and without any fresh bearish inputs, downside pressure has been curtailed, particularly with spillover from soymeal finding its footing, a trader said.

 

Meanwhile, lingering concerns over delayed crop maturation and harvesting amid cool, wet Midwest conditions remains an underlying feature to hold sellers at bay, he added.

 

The DTN Meteorlogix forecast calls for rain and thunderstorms to develop in the western Midwest (west of the Mississippi River) Thursday and continuing into Friday. Rainfall potential is up to two inches, with locally heavier amounts and high coverage. The rain will move into the eastern Midwest Thursday night and Friday, with rainfall of up to one inch. Additional rains of up to one inch will occur Saturday in the Ohio Valley. Temperatures will be near to below-normal Thursday and Friday.

 

On tap for Thursday, the U.S. Department of Agriculture is scheduled to release its weekly export sales report at 7:30 a.m. CDT. Analysts surveyed by Dow Jones anticipate export commitments will fall within a range of 500,000 to 800,000 metric tonnes.

 

In pit trades, ABN Amro and Man Financial each bought 500 November, and Bunge Chicago, Fimat and RJ O'Brien each bought 300 November.

 

Selling was widely scattered, with ABN Amro, Man Financial and RJ O'Brien each selling 400 November.

 

Day session volume for soybeans on the e-CBOT platform totaled 22,199 contracts.

 

South American soybean futures ended higher, with the November future settling 7 1/2 cents higher at US$6.15.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal gaining product share versus soyoil. Soymeal futures ended higher, buoyed by solid underlying domestic and export demand, analysts say. The active December future climbed to match Tuesday's session high, managing to test resistance at the contract's 50-day moving average.

 

Soyoil futures stumbled lower, drifting into negative territory on soymeal/soyoil spreading and borrowed weakness from declines in crude oil futures, analysts said. Weakness in the energy sector is managing to trim speculative length as biodiesel enthusiasm wanes in the wake of crude oil's tumble, analysts added.

 

December oil share ended at 42.50%, and the November/October crush ended at 81 1/4 cents.

 

In soymeal trades, Calyon Financial bought 500 December and Fortis bought 600 December. Fimat sold 300 December and RJ O'Brien sold 400 December.

 

In soyoil trades, Bunge Chicago bought 500 December, Fimat sold 800 December, and Iowa Grain and Man Financial each bought 300 December. Sellers were scattered among various commission houses, with JP Morgan a seller of 500 December, and Calyon Financial and RJ O'Brien each selling 400 December. Commercial firms were estimated buyers of 1,500 contracts, while speculative funds were light net sellers on the day.