October 20, 2006

 

CBOT Soy Review on Thursday: Higher; speculative, technical buys support move

 

 

Chicago Board of Trade soybean futures ended higher Thursday, continuing its ascent on speculative and technical buying.

 

November soybeans finished 3 1/2 cents higher at US$6.08. December soymeal settled US$0.90 lower at US$178.70 per short tonne, while December soyoil ended 60 points higher at 25.94 cents a pound.

 

The market continues to carve out new move highs, as bullish technical momentum, underlying demand and perceptions that soybeans need to move in tandem with corn and wheat attracted speculative buyers, analysts said.

 

Futures have managed to become immune to its bearish fundamentals, as bullish momentum is keeping a technical aspect in the market, traders added.

 

The most active November future posted a 3-month high settlement price, but its inability to extend overnight advances generated light profit taking pressure to trim earlier gains.

 

A solid export pace coupled with ideas the market remains undervalued in the scheme of corn and wheat's recent gains has served as a underlying feature to keep sellers on the run, a CBOT floor analyst said.

 

Spillover momentum from price strength in soyoil as well as a firm tonnee across broader commodity markets added to the supportive tonnee. In addition, the unwinding corn/soybean and wheat/soybean spreads added strength, floor sources said.

 

U.S. Department of Agriculture said U.S. soybean weekly export sales totaled 868,500 tonnes. For current marketing year, sales are running 48% ahead of last year.

 

Meanwhile, the DTN Meteorlogix forecast says Midwest weather through the end of the week offers some opportunities for harvest progress in the north and west, but very little progress from the Mississippi Valley east. Rainfall of up to one inch is on tap for the Missouri Boot heel through the Ohio Valley and the eastern Great Lakes from Friday through Sunday. Only scattered, light showers will occur in the western and northern Midwest. Harvest progress will be slowed down notably in the eastern and southern sectors of the region by this rainfall, which follows on the heels of heavy rain earlier this week in the southern and eastern Midwest, Meteorlogix reports.

 

In pit trades, ADM Investor Services bought 2,000 November, Goldenberg Hehmeyer bought 600 January, Man Financial bought 500 January, with Fortis and RJ O'Brien each buying 400 January. Speculative fund buying is estimated at 3,000 contracts.

 

Calyon Financial sold 1,500 November, Tenco sold 500 November and JP Morgan sold 300 November.

 

Day session volume for soybeans on the e-CBOT platform totaled 41,103 contracts.

 

South American soybean futures ended higher, with the November futures settling 3 cents higher at US$6.78.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed. Soyoil futures spiked higher, buoyed by speculative buying, as long-term demand prospects amid strength in European vegoil markets provided support, analysts said. The most active December future gapped higher on technical charts, keeping their recent upward move intact, climbing to two-month highs.

 

Soymeal futures ended lower across the board, slipping back from earlier gains. Spreading between the products weighed on the market, as futures lost product share to soyoil, analysts said. Futures initially propelled to new 3-month highs in unison with soybeans, with solid weekly export sales adding support, traders said. However, the market's inability to find follow through buying, allowed futures to succumb to product spreading pressure, analysts added.

 

January oil share ended at 42.76% and the November/December crush ended at 77 cents.

 

In soymeal trades, buyers and sellers were widely scattered among various commission houses, with JP Morgan seen on both sides of the market.

 

In soyoil trades, JP Morgan bought 1,400 December, UBS Securities bought 1,200 December and 800 March. Fimat bought 600 December and 400 January, with RJ O'Brien and Citigroup each buying 500 December. Speculative fund buying is estimated at 7,000 contracts. Bunge Chicago sold 1,600 December, Fimat sold 800 December and 600 January. Citigroup sold 500 December and Tenco sold 600 December.