October 4, 2007

 

CBOT Soy Review on Wednesday: Higher; recovers from recent setback

 

 

Chicago Board of Trade soybean futures ended higher Wednesday in a recovery bounce from Tuesday's sharp price declines.

 

November soybeans settled 7 cents higher at US$9.51 and January soybeans ended 7 1/2 cents higher at US$9.69 1/2. October soymeal settled US$3.20 higher at US$266.10 per short tonne, and December soymeal settled US$3.10 higher at US$271.80. October soyoil ended 8 points higher at 38.11 cents a pound, and December soyoil finished 10 points higher at 38.70.

 

The market managed to recover from Tuesday's losses as well as an early slide Wednesday, finding its footing after selling was exhausted, said John Kleist of Kleist Ag Consulting.

 

Funds seemingly bailed on a few longs amid the absence of any overtly bearish news to enter the market, Kleist added.

 

Soybeans also received a boost from wheat futures' bounce from Tuesday's limit-down slide, with lingering concerns surrounding dryness issues for early plantings in Brazil adding strength, analysts added.

 

Bullish underlying fundamentals remain underpinning themes, as Tuesday's collapse failed to produce any damage on technical charts, analysts said.

 

Nevertheless, Tuesday's losses were a warning flag that the market was getting a little pricey at recent highs, Kleist said. Futures have become strained at the upper edges, getting saturated with longs and in need of fresh bullish news to sustain upward momentum, Kleist added.

 

The DTN Meteorlogix Weather Service forecast said hot and mostly dry weather continues over Mato Grosso do Sul, Mato Grosso and southwest Goias for at least another seven days. High temperatures from the upper 90s to the low 100s Fahrenheit continue. Any significant soybean planting cannot take place until the rains arrive, Meteorlogix said.

 

Looking ahead, U.S. Department of Agriculture is slated to release weekly export sales figures for the week ended Sept. 27 at 8:30 a.m. EDT Thursday. Trade estimates put soybean export sales at 600,000 to 850,000 metric tonnes. Soymeal sales are projected in a range of 30,000 to 125,000 metric tonnes, with soyoil sales expected in a range from a net sales deficit of 10,000 tonnes to 20,000 tonnes.

 

Meanwhile, the National Commodities Supply Corp, or Conab, said it will release its first official estimate of Brazil's 2007-08 soy crop on Thursday. Early private estimates have put the crop as high as 64 million metric tonnes, compared to a record-breaking 2006-07 soy crop of 58 million tonnes.

 

In pit trades, Rand Financial bought 1,800 November, Fortis bought 700 November, with JP Morgan, Tenco and UBS Securities each buying 300 November. ADM Investor Services sold 1,000 November, Fimat sold 300 November and UBS securities sold 300 January. Speculative funds were estimated buyers of 6,000 contracts.

 

 

Soy Products

  

Soy product futures ended higher Wednesday, staging a recovery bounce from Tuesday's declines in unison with soybeans. The exhaustion of early follow-through selling set the stage for futures to recover, analysts said.

 

Soyoil futures ended higher in step with the rest of the soy complex but managed to lose ground to soymeal on spreads, analysts said.

 

December oil share ended at 41.59% and the November/October crush ended at 53 3/4 cents.

 

In soymeal trades, JP Morgan bought 600 December, Tenco bought 500 December, and Citigroup and Fimat each bought 300 December. Fimat, Bunge Chicago and MF Global each sold 400 December, and ADM Investor Services and Citigroup each sold 300 December. Speculative funds were estimated buyers of 3,000 lots.

 

In soyoil trades, JP Morgan bought 300 December, Citigroup bought 500 December and Fimat bought 500 March. Fimat sold 700 December, and ADM Investor Services and UBS Securities each sold 300 December.