October 5, 2006

 

CBOT Soy Review on Wednesday: Settles firm; wheat surge sparks rally

 

 

Chicago Board of Trade soybean futures ended Wednesday's session posting strong gains, rallying in step with advances in wheat futures as speculative buying emerged as a featured attraction.

 

November soybeans finished 12 3/4 cents higher at US$5.55 1/4. December soymeal settled US$4.40 higher at US$167.10 per short tonne, while December soyoil ended 13 points higher at 23.80 cents a pound.

 

The speculative buying push briefly sent prices catapulting to one-month highs, as technically motivated buys emerged to break futures out their session-long doldrums, analysts said.

 

The market was energized by wheat, and with bearish supply side fundamentals seen as adequately priced into futures, soybeans staged a consolidative rally off recent declines, traders added.

 

Anticipation of a continuation of strong weekly export sales helped supply part of the rally, a market analyst said. Meanwhile, Don Roose of U.S. Commodities added that the market attempted to lift prices to levels that will attract some farmer selling. Cash prices have been hovering near loan levels, and with the basis wide, farmers have been tight fisted with supplies, he added.

 

Light underlying support was generated from concerns over harvest slowdowns in the eastern Midwest despite an aggressive cutting pace reported in the western belt, said a cash connected floor broker.

 

However, upside potential was capped by technical resistance at the November futures' 50-day moving average - US$5.62.

 

Meanwhile, the DTN Meteorlogix forecast say harvest delays in the eastern Midwest continue as wet weather persists this week, possibly continuing into next week. Up to one inch of rain could fall from Wednesday into early Thursday. Relief from the damp weather may come late Thursday and Friday, with the drier weather continuing through the weekend. In the western Midwest, harvest weather is much more ideal, Meteorlogix reports. Dry conditions are in store for the region through early Sunday, before there is a chance of showers late Sunday or Monday, Meteorlogix said in the forecast.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release its weekly export sales report 7:30 a.m. CDT. Analysts surveyed by Dow Jones anticipate export commitments in the 600,000 to 900,000 metric tonne range.

 

In pit trades, buyers and sellers were scattered among various commission houses, with ABN Amro, Calyon Financial, and Tenco featured buyers. Speculative fund buying is estimated between 2,000 and 3,000 contracts. South American soybean futures ended higher, with the November future settling 10 cents higher at US$6.30.

 

 

Soy Products

 

Soy product futures ended higher across the board, bouncing in tune with the supportive tone filtering through the CBOT ag complex. Soymeal futures rallied near two-week highs, buoyed by speculative buying, with borrowed strength in soybeans and wheat serving as the catalysts for the gains, traders said. Technical buying accelerated the advances, with the ability of the most- active December future to climb above meaningful chart resistance uncovering pre-placed buy orders, traders added.

 

Soyoil futures rebounded from early weakness on the backs of price strength in the rest of the soy complex. Futures were on the defensive for most of the day pressured by declines in crude oil, analysts say. Futures slid near eight-month lows in early trade, but the surge is other grains coupled with a late recovery in crude oil provided support to lift prices into positive territory down the stretch, traders added.

 

December oil share ended at 41.59% and the November/October crush ended at 66 1/2 cents.

 

In soymeal trades, buyers and sellers are widely scattered among various commission houses, with speculative funds net buyers on the day.

 

In soyoil trades, Iowa Grain bought 800 December, Citigroup and JP Morgan each bought 500 December, with Fimat, RJ O'Brien, Rand Financial and Rosenthal each buyers of 300 December. Rand Financial sold 1,400 December, Calyon Financial sold 500 December, with Man Financial, Citigroup and Prudential Financial featured sellers.