October 6, 2006

 

CBOT Soy Review on Thursday: Settles up on spec buys; strong exports

 

 

Chicago Board of Trade soybean futures ended higher, rallying for the second consecutive day on speculative buys, as solid export demand and technically inspired buying underpinned prices.

 

November soybeans finished 10 1/4 cents higher at US$5.65 1/2. December soymeal settled US$2.50 higher at US$169.60 per short tonne, while December soyoil ended 26 points higher at 24.06 cents a pound.

 

The strong showing in weekly export sales and the ability of the market to activate buy stops as futures bound through meaningful overhead chart resistance firmly planted futures in positive territory, said John Kleist, analyst with Top Third Ag Marketing in Chicago.

 

The most active November future propelled to a 6-week high in early action, courtesy of speculative buys, with strength in outside markets and ideas soybeans may have established a harvest low previously kept aggressive sellers temporarily on the sidelines, traders added.

 

The supportive theme was consistent from the outset, as prices bound higher amid thoughts that bearish fundamentals had been adequately factored into prices. Follow-through buying from Wednesday's gains suggests that a harvest low could be in place and that prices could work sideways to higher into the end of the year, said a technical analyst. The November contract's ability to settle above the September high of US$5.63 provided fresh technical strength, he added.

 

Nevertheless, upside potential remains limited by harvest related pressures as the market gears up record 2006 soybean output on the backs of ample old crop carryover supplies, analysts added.

 

Meanwhile, the DTN Meteorlogix forecast said the next three to five days, covering the end of this week through the coming weekend, offers mainly dry weather for harvest in the Midwest. A few light showers are on tap for Saturday and Sunday in the region, but with less than one-quarter inch precipitation. The ten-day outlook through the middle of October keeps mostly dry weather in place as well, Meteorlogix forecast.

 

This weather trend will be favorable for harvest progress, but there will still be slowdowns in harvest in Wisconsin, Michigan, Indiana and Ohio due to recent rainfall, however. Temperatures will be normal to below normal, and this trend will result in a slower pace of in-field crop drying, Meteorlogix added in their forecast.

 

In pit trades, speculative fund buying was estimated at 2,000 contracts with JP Morgan buying 600 November, Term Commodities buying 400 November, and Calyon Financial and Fimat each buyers of 300 November. UBS Securities sold 600 November, Fimat sold 700 November, with ADM Investor Services a seller of 300 November.

 

Day session volume for soybeans on the e-CBOT platform totaled 39,625 contracts.

 

 

Soy Products

  

Soy product futures pushed higher, moving in unison with soybeans. Soymeal was buoyed by speculative buying, continuing its recovery from prior lows supported by underlying demand and technical strength, traders said. The most active December futures climbed to near a 10-week high before trimming its gains.

 

The firm tone filtering through the soy complex was prevalent in soyoil as well, with the market extending Wednesday's bounce from a near-term low on speculative buys attributed to strength in soybeans and higher crude oil values, analysts said.

 

December oil share ended at 41.50% and the November/October crush ended at 64 1/2 cents.

 

In soymeal trades, ADM Investor Services and Fortis each bought 500 December, Fimat and JP Morgan each bought 600 December, with Man Financial a buyer of 800 December. Speculative fund buying was estimated at 3,000 contracts. JP Morgan sold 2,000 December, with Bunge Chicago selling 300 December.

 

In soyoil trades, Goldenberg Hehmeyer bought 1,500 December, Prudential Financial bought 500 December, Bunge Chicago and JP Morgan each bought 300 December. Sellers were widely scattered among various commission houses, with JP Morgan a featured seller of 1,000 December. Speculative funds were estimated buyers of 2,000 contracts on the day.