October 19, 2007

 

CBOT Soy Review on Thursday: Rallies on inflationary-induced buying

 

 

Chicago Board of Trade soybean futures ended sharply higher Thursday, bouncing to the upside on speculative buying attributed to inflationary- induced influences.

 

November soybeans settled 17 1/4 cents higher at US$9.91 1/2 and January soybeans ended 17 1/4 cents higher at US$10.10 1/4. December soymeal settled US$3.20 higher at US$278.10. December soyoil finished 84 points higher at 40.99 cents.

 

The market got a boost from weakness in the U.S. dollar, with broadbased support seen across commodity markets in general, analysts said. The U.S. dollar index hit a record low and the euro hit a record high against the greenback. New all-time highs in crude oil futures spilled over into soyoil and subsequently into soybeans in the process, traders said.

 

The bullish theme engulfed the market from the outset, with technical strength and weather-related harvest delays providing additional support to keep prices firmly underpinned, analysts added.

 

Soybeans rallied to 3-week highs, feeding off the inflation-based buying, with the longer-range bullish aspects of tightening stocks and growing global demand an underlying feature as well, traders said.

 

The DTN Meteorlogix Weather Services forecast calls for a continuation of a wet weather pattern in the Midwest. Rainfall of an additional inch will move across the entire region. This soaking rain pattern will bring more delays and disruptions to corn and soybean harvests. Forecast maps continue to show an unsettled weather pattern in the central U.S. during the next week; the most unsettled is in the already-wet western Midwest. This prospect of more rain will stymie harvest in the entire western half of the Midwest.

 

U.S. Department of Agriculture reported weekly soybean export sales were 770,100 metric tonnes for the week ended Oct. 11. Analysts had forecast sales between 400,000 and 1 million metric tonnes. Soymeal sales were a net 109,900 tonnes, and soyoil commitments were 26,400 metric tonnes.

 

In pit trades, buyers and sellers were scattered among various commission houses, with ADM Investor Services buying 1,000 January and RJ O'Brien buying 300 January. Speculative fund buying was estimated at 5,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures spiked higher, with soyoil the upside leader of the complex. Soyoil remains the bullish leader of the products, with record high crude oil prices buoying speculative interest in world vegoils amid optimistic outlooks for biodiesel derived from soyoil, analysts said.

 

Technically inspired buying aided the higher theme, with pre-placed buy stops activated once nearby contracts eclipsed overhead resistance levels, traders said. Futures set new contract highs and rallied to new 23-year highs.

 

Soymeal futures catapulted higher in unison with the rest of the complex, bolstered by spillover from soybeans. However, upside potential was held in check by oil/meal spreading as soyoil captured product share, analysts said.

 

December oil share ended at 42.43% and the November/December crush ended at 71 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.

 

In soyoil trades, RJ O'Brien and Rand Financial each bought 400 December, and Tenco sold 1,000 December. Speculative fund buying was estimated at 3,000 lots.