October 14, 2006

 

CBOT Soy Review on Friday: Settles up; continues ascent on speculative buys

 

 

Chicago Board of Trade soybean futures ended higher Friday, continuing the market's ascent to higher levels on speculative buying amid borrowed strength from grain futures, technical momentum and solid underlying demand.

 

November soybeans finished 11 3/4 cents higher at US$5.91 1/2. December soymeal settled US$6.40 higher at US$179.70 per short tonne, while December soyoil ended 4 points higher at 24.93 cents a pound.

 

For the week, November soybeans settled 27 1/2 cents higher, December soymeal is up US$11.90 for the week and December soyoil was up 71 points on the week.

 

Futures bound higher from the outset, with strong gains in neighboring markets, good underlying export sales, and the ability of futures to eclipse overhead technical resistance attracting speculative buying, analysts said.

 

The market remains in a counter seasonal rally, with speculative buyers continuing to feed on the premise that soybeans remain undervalued in relation to the sharply higher price moves of corn and wheat in recent weeks, analysts added.

 

Bearish supply side fundamentals have taken a back seat to technical enthusiasm, as weaker shorts run for cover after prices bound through key technical levels, traders said.

 

The most active November future climbed to a two-month high, satisfying near term technical objectives of eclipsing the 100-day moving average of US$5.86 1/2, Thursday's high of US$5.90 and filling a chart gap up to US$5.94, analysts said.

 

Meanwhile, weekly export sales provided mild support. U.S. Department of Agriculture reported soybean commitments at 1,086,100 metric tonnes, above trade estimates of 700,000 to 900,000 metric tonnes.

 

On tap for Monday, the National Oilseed Processors Association will release its September soy crush report 7:30 a.m. CDT. NOPA's, monthly soybean crush report is expected to decline to about 133 million bushels from the previous report, according to a survey of industry analysts.

 

In pit trades, Calyon Financial and Tenco each bought 1,000 November, with speculative fund buying estimated at 3,000 contracts. Sellers were scattered among various commission houses.

 

Day session volume for soybeans on the e-CBOT platform totaled 32,410 contracts.

 

South American soybean futures ended higher, with the November futures settling 15 cents higher at US$6.70.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed Friday, with soymeal gaining at the expense of soyoil. Soymeal futures propelled to 3-month highs, rallying on speculative and commercial buying, traders said. The market was buoyed technically motivated activity, with spillover from higher corn prices and good underlying demand catalysts for the gains. The most active December future gapped higher on technical charts, with advances accelerating on speculative buying and short covering once the contract eclipsed resistance at the contract's 200-day moving average, analysts said.

 

Soyoil futures ended mixed, with active contracts pulling back from earlier gains on soymeal/soyoil spreading and technical weakness, analysts said. The most active December futures inability to challenge resistance at its 200-day moving average and subsequent slide below its 50-day moving average uncovered selling pressure, floor traders said.

 

December oil share ended at 40.96% and the November/December crush ended at 78 cents.

 

In soymeal trades, FCStonnee bought 1,100 December, Fimat bought 800 December, Man Financial bought 1,000 December and JP Morgan bought 400 December. Speculative fund buying is estimated between 3,000 and 4,000 contracts. JP Morgan sold 1,400 December.

 

In soyoil trades, Bunge Chicago bought 800 December, JP Morgan bought 1,000 December and Rand Financial bought 300 December. Speculative fund buying is estimated at 2,000 lots.