October 24, 2007

 

CBOT Soy Review on Tuesday: Climbs; consolidative gains in light trade

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, posting some consolidative gains on light buying in quiet trade.

 

November soybeans settled 5 1/4 cents higher at US$9.81 3/4 and January soybeans ended 5 1/2 cents higher at US$9.99 1/4. December soymeal settled US$0.90 higher at US$276.60. December soyoil finished 20 points higher at 40.42.

 

The combination of strong positive technical features, weakness in the U.S. dollar and light end user buying provided support to underpin prices, said John Kleist of Kleist Ag Consulting.

 

Underlying commercial end-user buying served as a catalyst to support prices, analysts said. Overall activity was light, with a lack of aggressive selling helping underpin prices in the face spillover weakness from wheat and crude oil futures, analysts added.

 

Nevertheless, futures remain confined within a 10-day trading range, with favorable harvest conditions in the western Midwest this week and improved planting weather in Brazil keeping a lid on upside movement, Kleist said. Improved Brazil planting conditions are taking some upside off the market with futures not finding much support above US$10.00, but longer range supportive outlooks remain bullish features to keep a floor under prices as well, he added.

 

Looking ahead, traders anticipate the market will continue to whipsaw inside the current trading range, looking for direction amid the absence of fresh fundamental news break futures out of there current cycle, a CBOT floor broker said.

 

The DTN Meteorlogix forecast calls for generally dry weather in the western Midwest. This pattern will benefit corn and soybean harvest progress - especially in wet areas of Iowa, eastern Nebraska, eastern South Dakota, and Minnesota, where early-October rains were the heaviest, Meteorlogix said.

 

East of the Mississippi River, showers and rain brought precipitation of up to one and one-half inches to southern Illinois, Indiana, Ohio, and Kentucky on Monday. Additional rains of up to one-half inch will occur Tuesday before a drier weather pattern forms in the latter half of the week. The general impact of this moisture is favorable, due to row crop harvest well advanced in the eastern Midwest, and soil moisture supplies in short to very short categories in much of the region, Meteorlogix said.

 

Meanwhile, Brazil's northern soybean areas have an improved crop condition outlook. Recent rainfall has helped improve soil moisture for planting early soybeans in Mato Grosso. Scattered thundershowers are possible again during this week. Last week was the wettest week in Brazil thus far this growing season, with good rains reported in Mato Grosso, Goias, and other areas of central Brazil. The planting pace is picking up in Brazil, but is behind average, Meteorlogix said.

 

In pit trades, ADM Investor Services bought 300 January, Citigroup bought 400 January, and MF Global bought 300 July. Rand Financial sold 400 January. Speculative fund buying was estimated at 2,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mostly higher, climbing in unison with soybeans. Soyoil futures experienced two-sided activity, managing to stave off spillover weakness from a downturn in crude oil futures on bullish longer range demand outlooks, analysts said. Outlooks for strong vegoil demand for biodiesel to carryon through next year remains a bullish feature for the market, analysts added.

 

Soymeal futures ended higher, feeding off borrowed support from the rest of the soycomplex, analysts said.

 

December oil share ended at 42.22% and the November/December crush ended at 71 1/2 cents.

 

In soymeal trades, buyer and sellers were lightly scattered among various commission houses, with Bunge Chicago a seller of 400 July. Speculative fund buying was estimated at 1,000 lots.

 

In soyoil trades, buyers and sellers were widely scattered among various commission houses. JP Morgan, Fimat, and RJ O'Brien each bought 300 December. ADM Investor Services sold 600 December and 300 January, Bunge Chicago sold 400 December, Tenco sold 500 December, and Iowa Grain sold 600 December. Speculative fund buying was estimated at 1,000 lots.