October 24, 2006

 

CBOT Soy Review on Monday: Propels to new-move highs on technical buying

 

 

Chicago Board of Trade soybean futures ended Monday's session posting solid gains, climbing to new highs for the current move on technically inspired speculative buying.

 

November soybeans finished 11 cents higher at US$6.17 1/2, and January soybeans ended 10 1/4 cents higher at US$6.30 1/2. December soymeal settled US$2.50 higher at US$182.90 per short tonne, while December soyoil ended 39 points higher at 26.56 cents a pound.

 

The market's ability to rally is a bit of a surprise, but with bullish momentum and a lack of any aggressive selling, traders were content to satisfy upside technical objectives, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

The speculative push propelled nearby contracts to new three-month highs, with advances accelerating once futures were able to breach resistance at last week's highs, traders added.

 

Technical considerations dominated price action in the absence of fresh news, as the market was able to shake off bearish influences from outside markets as well as its own underlying fundamental pressures, analysts said.

 

The market seems to be targeting technical resistance in the US$6.20-US$6.25 area as an upside objective, with traders saying as long as export demand remains strong, a significant price correction may be put on hold, said a CBOT commission house broker. Nevertheless, overbought market conditions continue to keep traders on guard for exhausted buying interest, he added.

 

Meanwhile, the DTN Meteorlogix forecast calls for a couple days of dry weather Monday and Tuesday, followed by moderate to heavy rain Wednesday and Thursday. The heaviest rains will be in eastern Iowa through Illinois, Indiana and Ohio, with from one to 1 1/2 inches of rainfall. Lighter rains will occur from central Iowa north, south and west. Harvest delays will be notable in the eastern Midwest.

 

In pit trades, ADM Investor Services bought 1,000 November, Calyon Financial bought 1,000 November and 700 January, and Fimat bought 700 November. Speculative buying was estimated between 4,000 and 5,000 contracts.

 

RJ O'Brien, Citigroup and Man Financial each sold 500 January. UBS securities sold 300 January and JP Morgan sold 500 November.

 

South American soybean futures ended higher, with the November futures settling 11 1/2 cents lower at US$6.87 1/2.

 

 

SOY PRODUCTS

 

Soy products ended higher across the board, fueled by technically motivated buying. Soymeal futures ended with solid gains, with nearby contracts rallying and settling at three-month highs. Speculative and commercial buying helped break futures out of a sideways trading range, with underlying demand strength aiding the speculative bounce, analysts said.

 

Soyoil futures ended higher, managing to recoup Friday's losses. Futures initially came under pressure from crude oil futures, but once the most-active December contract satisfied a downside objective, upside movement was rekindled, analysts said. December futures filled a gap on technical charts down to 25.98 left from Oct. 19, before support was found to propel prices to session highs on the close, traders add.

 

January oil share ended at 42.31% and the November/December crush ended at 77 cents.

 

In soymeal trades, Fortis bought 500 December, and Calyon Financial and Man Financial each bought 400 December. Sellers were widely scattered among various commission houses. Speculative fund buying was estimated at 2,000 contracts.

 

In soyoil trades, buyers and sellers were widely scattered among various commission houses, with speculative fund buying estimated between 1,000 and 2,000 contracts.