October 10, 2007

 

CBOT Soy Review on Tuesday: Up sharply; bounces on bullish outlooks

 

 

Chicago Board of Trade soybean futures ended sharply higher Tuesday, scoring a solid bounce from recent declines on bullish underlying outlooks.

 

November soybeans settled 24 3/4 cents higher at US$9.50 1/4 and January soybeans ended 26 3/4 cents higher at US$9.68 3/4. October soymeal settled US$8.60 higher at US$263.30 per short tonne, and December soymeal settled US$8.60 higher at US$269.10. October soyoil ended 47 points higher at 38.45 cents a pound, and December soyoil finished 51 points higher at 38.99.

 

The market was supported by ideas recent declines had left futures overextended on the downside, said John Kleist of Kleist Ag Consulting.

 

Speculative and commercial buying were featured, with strength in outside inflationary markets, worries over planting delays in Brazil and the uncertainty of U.S. soybean output heading into Friday's crop report uncovering buying interest, analysts said.

 

The market fed off overnight strength, with futures gaining momentum from wheat futures' ability to bounce off its lows overnight and with activity fairly thin, volatile price swings will remain the norm until a clear picture of U.S. production and South American acreage is established, Kleist added.

 

Variability in yield results from early harvest activity coupled with rumors the USDA may trim its 2007 acreage forecasts in Friday's crop report buoyed upward momentum, analysts added.

 

The U.S. Department of Agriculture is scheduled to release its latest production, yield and supply and demand estimates Friday at 8:30 a.m. EDT. The average of analysts' estimates pegged 2007 soybean production at 2.648 billion bushels, up from the September figure of 2.619 billion. The average was from a range of 2.583 billion to 2.722 billion bushels. Ending stocks for 2007-08 were estimated at 238 million bushels from a range of estimates that span from 193 million to 285 million bushels.

 

The USDA is scheduled to release its weekly crop progress report Monday at 4 p.m. EDT. Analysts anticipate the U.S. soybean harvest at 45% to 53% complete.

 

The DTN Meteorlogix Weather Service forecast said Brazil's northern soybean area is still dry, but the forecast for this weekend sees some possible showers falling. Those showers may allow soybean planting to start, Meteorlogix said.

 

In pit trades, ADM Investor Services bought 500 January and 800 May, Fimat bought 300 March, Rand Financial bought 300 November and Kottke bought 500 March. Sellers were lightly scattered among various commission houses. Commercial buying was estimated at 3,000 lots, while speculative fund buying was pegged at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures settled sharply higher, recouping most of the losses sustained in the past two trading days. Soymeal futures rallied in step with soybeans, feeding off worries of smaller supplies and strengthening global demand, analysts said.

 

Soyoil futures rallied in step with the rest of the complex, garnering additional support from higher overnight Malaysian palm oil and solid gains in crude oil futures, analysts said. Nevertheless, soyoil lost some product share on meal/oil spreading, analysts added.

 

December oil share ended at 42.01% and the November/October crush ended at 52 cents.

 

In soymeal trades, speculative fund buying was estimated at 2,000 lots, with Fimat a featured buyer of 500 December. JP Morgan sold 500 December with additional sellers lightly scattered among various commission houses.

 

In soyoil trades, speculative fund buying was estimated at 2,000 lots, with ADM Investor Services a buyer of 300 December. JP Morgan sold 400 December and 300 May, Citigroup sold 300 December, and USA sold 400 December.