September 22, 2006

 

CBOT Soy Review on Thursday: Climbs; speculative buys, threat of harvest delay

 

 

Chicago Board of Trade soybean futures propelled higher Thursday, climbing to two-week highs on speculative buying amid the threat of harvest delays, solid demand and tight cash markets.

 

November soybeans finished 8 3/4 cents higher at US$5.58. December soymeal settled US$2.30 higher at US$168.10 per short tonne, while December soyoil ended 19 points lower at 24.70 cents a pound.

 

The market bounced higher, feeding off speculative short covering, as the potential for rain showers to slow harvest activities, a need to boost prices to levels that will pry supplies out of farmer hands and support from outside markets encouraged buying, said a CBOT floor analyst.

 

The market had adequately factored in its bearish fundamentals, and with farmers holding supplies, selling pressure was limited, traders said.

 

Technically motivated buying aided the gains, with upside momentum feeding off itself after active contracts eclipsed resistance at last week's highs, traders said. Underlying support from firm soymeal prices and the impact of spillover strength from sharp gains in the neighboring corn and wheat markets kept sellers on the run, traders added.

 

The DTN Meteorlogix forecast calls for a strong storm system centered in eastern Colorado to bring showers and thunderstorms to the western Midwest Thursday, with the entire Midwest experiencing showers and thunderstorms Thursday through Saturday. The western Midwest (west of the Mississippi) areas will have rainfall of up to two or more inches. Eastern areas will have rain of up to 1 1/2 inches. Harvest delays are likely, Meteorlogix forecasts.

 

Meanwhile, seasonal analogs support a wetter-than-normal pattern into October, Cropcast Weather Services forecast in a daily weather report. "Our current set of analog years tends to show a fairly strong leaning toward a wetter-than-normal pattern in October across the Midwest. This could certainly threaten further delays to corn and soybean harvest if this is verified," Cropcast said in the report.

 

In pit trades, Man Financial and RJ O'Brien each bought 800 November, Fimat bought 700 November, Fortis bought 600 November and Calyon Financial bought 500 November. ABN Amro, Goldenberg Hehmeyer, Shatkin/Arbor and Tenco were noted buyers as well. Speculative fund buying was estimated between 3,000 and 4,000 contracts.

 

On the sell side, sellers were widely scattered among various commission houses, with Fimat a key seller of 800 November.

 

Volume for soybeans on the e-CBOT platform totaled 23,069 contracts.

 

South American soybean futures ended higher, with the November futures settling 5 cents higher at US$6.20.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board. Soymeal futures led the upward ascent, buoyed by speculative buying as solid underlying domestic and export demand provided a fundamental base for prices, analysts said.

 

Technically inspired buying helped propel active contracts to 7-week highs, as the market uncovered speculative short-covering interest, traders said. Larger-than-expected weekly export sales aided the gains, with analysts saying supplies at current price levels are very attractive to end users.

 

Soyoil futures ended higher, but lost product share to soymeal on spreads, analysts said. The market managed to push higher in unison with the broad-based gains in other commodities, with speculative buying fueling the advances, analysts said. Strength in crude oil futures provided leadership for futures once again, with the inability of December futures to penetrate support at Wednesday's low generating some technical strength, floor traders said.

 

December oil share ended at 42.35%, and the November/October crush ended at 79 1/2 cents.

 

In soymeal trades, Man Financial and RJ O'Brien each bought 1,000 December, ADM Investor Services, Bunge Chicago, Calyon Financial and Fortis each bought 500 December. Fimat sold 1,400 December, RJ O'Brien sold 800 December and Bunge Chicago sold 500 December. Speculative fund buying was estimated between 3,000 to 4,000 contracts.

 

In soyoil trades, Rand Financial 1,100 December, UBS Securities bought 500 December and Prudential Financial bought 300 December. Man Financial and Prudential Financial each sold 400 December. Speculative fund buying was estimated near 2,000 contracts.