October 10, 2006

 

CBOT Soy Review on Monday: Propels higher on borrowed wheat strength

 

 

Chicago Board of Trade soybean futures ended higher Monday, rallying to two-month highs on speculative buying amid spillover strength from limit up moves in neighboring grain futures.

 

November soybeans finished 10 1/2 cents higher at US$5.74 1/2. December soymeal settled US$2.30 higher at US$170.10 per short tonne, while December soyoil ended 77 points higher at 24.99 cents a pound.

 

The rally in soybeans is all to do with the surge in wheat prices, as sellers were unwilling to press the market in the face of limit up moves in wheat and corn, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

Soybeans were the weak sister of the CBOT ag complex rally, but managed to propel higher in a followers role, as the market lacked any supportive fundamental features, analysts said.

 

Broad based commodity strength, with advances in metals and energies adding to the speculative push that boosted prices to double digit gains. A quiet news front kept attention on the volatile activity in wheat, overshadowing supply side pressures, a CBOT commission house broker said.

 

Trade expectations for record projected 2006 crops, ample old crop carryover supplies and active harvest activity remain hindrances to upside potential, but the influence of outside market's kept prices firmly underpinned, added Scoville.

 

The average of analysts estimates taken from a survey compiled by Dow Jones Newswires for 2006-07 U.S. soybean production based on conditions as of Oct. 1 pegs the crop at 3.213 billion bushels. The estimates ranged from 3.155 billion bushels to 3.326 billion bushels. The average of estimates pegged 2006-07 ending stocks at 588 million bushels. The estimates ranged from 521 million to 671 million bushels.

 

Meanwhile, the DTN Meteorlogix forecast said rain showers will spread west to east across the Midwest through Wednesday. Rainfall in the western Midwest will total up to one-half inch. Some light snow is possible in the Dakotas and Minnesota by Wednesday. Eastern Midwest areas will have heavier rainfall of up to one inch by midweek. Along with the rainfall, temperatures will turn much colder; hard freeze conditions are likely by Wednesday in the northern sections of the region. This combination of rainfall and chilly temperatures has the potential to delay harvest by dampening crops, along with producing muddy fields, Meteorlogix reports.

 

In pit trades, speculative fund buying was estimated at 5,000 contracts. Man Financial bought 1,500 November, ADM Investor Services bought 700 November, UBS Securities bought 1,100 November, and Citigroup bought 500 November. Goldenberg Hehmeyer sold 1,200 November, JP Morgan sold 600 November, with Calyon Financial and Tenco each sellers of 300 November.

 

Day session volume for soybeans on the e-CBOT platform totaled 35,707 contracts.

 

South American soybean futures ended higher, with the November futures settling 6 cents higher at US$6.50.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, buoyed by broad based commodity strength. Soymeal was supported by strength in soybeans, but still managed to lose product share at the expense of soyoil price strength, analysts say.

 

Soyoil futures ended sharply higher, soaring to three-week highs on speculative buying. Futures garnered prices strength from the speculative side of the market, with support from higher soybean and energy prices helping keep futures firmly underpinned, analysts say. The most active December future gapped higher on technical charts, with advances accelerating on short covering and pre placed buying orders once futures breached overhead resistance levels, traders added.

 

December oil share ended at 42.35% and the November/October crush ended at 68 1/4 cents.

 

In soymeal trades, Speculative funds were net buyers on the day with JP Morgan a featured buyer of 1,000 December. Tenco sold 1,000 December.

 

In soyoil trades, Speculative fund buying was estimated near 4,000 lots. UBS Securities bought 1,500 December, Tenco bought 1,000 December, with Man Financial and Fortis each buying 800 December. Sellers were scattered among various commission houses with JP Morgan and Rand Financial each sellers of 700 December.