October 13, 2006

 

CBOT Soy Review on Thursday: Higher on corn, technicals, USDA data

 

 

Chicago Board of Trade soybean futures spiked higher Thursday, buoyed by speculative buying amid spillover strength from corn, technical momentum and supportive crop data from the U.S. Department of Agriculture.

 

November soybeans finished 17 1/2 cents higher at US$5.79 3/4. December soymeal settled US$6.10 higher at US$173.30 per short tonne, while December soyoil ended 39 points higher at 24.89 cents a pound.

 

The combination of supportive influences propelled futures to higher levels with speculative fund buying and short-covering featured attractions, traders said.

 

Technical enthusiasm encouraged funds to the buy side, with perceptions that soybeans are undervalued in the bigger trends of corn and wheat helping boost prices to two-month highs, said John Kleist, analyst with Top Third Ag Marketing in Chicago.

 

The supportive impact of corn rallying to limit up levels, and the spread between nearby soybean and CBOT wheat prices at their narrowest gap between the two on record Wednesday, left traders looking at soybeans as a buying opportunity, analysts say.

 

Soybeans fate is still in the hands of corn and wheat, as USDA data showed lower-than-expected production and ending stocks are still at record high levels, added Kleist.

 

Traders said upward momentum accelerated once the November contract breached chart resistance at its 100-day moving average - US$5.86 1/4 as well as its ability to filter into a chart gap from Aug. 7, between US$5.86 1/2 and US$5.94.

 

The theme continued, until nearby corn pulled off limit up levels and bearish supply side fundamentals managed to apply light pressure to trim advances, traders added.

 

The USDA pegged 2006-07 soybean production at 3.189 billion bushels, below the average of trade estimate of 3.213 million, but up 96 million from September. Soybean yield is projected at 42.8 bushels per acre, up 1 bushel from the September projection of 41.8 bushels an acre and below the average of trade estimates at 43.4. 2006-07 U.S. ending stocks are estimated at 555 million bushels, below the average of trade estimates at 588 million.

 

On tap for Friday, USDA is scheduled to release its weekly export sales report at 7:30 a.m. CDT. Analysts surveyed by Dow Jones anticipate commitments in the range of 700,000 to 900,000 metric tonnes.

 

In pit trades, Citigroup, Fimat, Man Financial, RJ O'Brien and UBS Securities each bought 1,000 November. UBS Securities bought 1,500 January, with Rand Financial buying 700 November. Speculative funds were estimated buyers of between 8,000 and 10,000 lots.

 

On the sell side, Man Financial sold 1,000 November, Calyon Financial sold 1,500 November, while JP Morgan and Fortis each sold 500 November.

 

Day session volume for soybeans on the e-CBOT platform totaled 53,788 contracts.

 

South American soybean futures ended higher, with the November futures settling 22 cents higher at US$6.55.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, up in unison with price strength in soybeans. Soymeal futures bounded to over two-month highs, buoyed by speculative buying amid spillover from soybeans and corn as well as technical strength associated with the December future climbing above its 100-day moving average, analysts said.

 

Soyoil futures were higher with the rest of the complex, but finished well off session highs. Technical weakness at the December contract's 50-and 200-day moving averages as well as higher ending stock projections from the USDA capped upside movement, traders said.

 

December oil share ended at 41.80% and the November/December crush ended at 75 1/4 cents.

 

In soymeal trades, speculative funds were estimated buyers of 5,000 contracts. Man Financial bought 1,000 December, Fimat bought 600 December, with ADM Investor Services and Calyon Financial each bought 500 December. Rosenthal bought 500 March. JP Morgan was a featured seller of 3,000 December.

 

In soyoil trades, speculative funds bought 3,000 contracts, with Tenco a buyer of 1,000 December, and Bunge Chicago and Rand Financial each buying 500 December. Sellers were scattered among various commission houses.