October 12, 2007

 

CBOT Soy Review on Thursday: Rallies on speculative short covering, technical buys

 

 

Chicago Board of Trade soybean futures ended higher across the board Thursday, rallying on speculative short covering, technical buying and bullish acreage outlooks for Friday's crop report.

 

November soybeans settled 13 1/4 cents higher at US$9.81 1/2 and January soybeans ended 14 1/4 cents higher at US$10.01. October soymeal settled US$3.20 higher at US$272.00 per short tonne, and December soymeal settled US$3.20 higher at US$278.10. October soyoil ended 50 points higher at 39.40 cents a pound, and December soyoil finished 50 points higher at 39.97.

 

The market faced a plethora of supportive influences Thursday, with strength in outside inflationary markets amid weakness in the U.S. dollar, uncertainty surrounding acreage and yields in Friday's reports and underlying demand attracting speculative buying, analysts said.

 

Spillover support from a jump in soyoil prices, and limit up gains in neighboring wheat futures added further fuel to ignite upward momentum after futures chopped around in consolidative action for most of the day, analysts added.

 

Meanwhile, technical buying played a key role down the stretch, with advances accelerating once the January future pushed above solid resistance at US$9.90, the top of this month's big downside price gap on the daily bar chart and above the psychological US$10.00 per bushel level, traders said.

 

Otherwise, traders were seen watching the strong gains in wheat, with some participants unwilling to take on added risk heading into Friday's crop reports, 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.

 

USDA is slated to release weekly export sales figures for the week ended Oct. 4 at 8:30 a.m. EDT Thursday. Trade estimates put soybean export sales at 600,000 to 900,000 metric tonnes. Soymeal sales are projected in a range of 50,000 to 175,000 metric tonnes, with soyoil sales expected in a range from a net sales deficit of 5,000 tonnes to 20,000 tonnes.

 

The DTN Meteorlogix Weather Service forecast said northern Brazil has been hot and dry - into the triple digits - but some rain may fall this weekend. However, at least an inch is needed to get a good start on soybean planting, and only scattered areas are likely to get that much.

 

In pit trades, speculative fund buying was estimated at 3,000 lots, with buyers and sellers scattered among various commission houses.

 

 

SOY PRODUCTS

 

Soy product futures ended higher Thursday, with soyoil the upside leader. Soyoil futures rallied on a combination of speculative and commercial buying, fueled by the bullish impact of higher crude oil and Malaysian palm oil futures, analysts said. Strong underlying demand and the potential for a smaller soybean crop in face of rising energy prices gave speculative buyers a shot in the arm, analysts added.

 

Soymeal futures ended up, managing to recover from earlier weakness on late short covering and borrowed strength from the neighboring wheat market, traders said. The market was under pressure fro most of the day from oil/meal spreading, but managed to gain its footing on late positioning heading into Friday's crop reports, analysts said.

 

December oil share ended at 41.83% and the November/October crush ended at 50 1/4 cents.

 

In soyoil trades, ADM Investor Services bought 1,200 December, Bunge Chicago bought 600 December, and Fimat bought 400 December. UBS Securities sold 600 December. Commercial buying was estimated at 2,500 lots and Speculative fund buying was estimated at 2,000 lots.

 

In soymeal trades, JP Morgan bought 300 December and Rand Financial bought 1,600 March. Bunge Chicago sold 400 March and 300 May.