October 25, 2005

 

CBOT Soy Review on Monday: Ends up; bounces off early lows

 

 

Soybean futures at the Chicago Board of Trade ended moderately higher Monday, managing to bounce back from initial weakness after early downside technical objectives were met, traders said.

 

November soybeans ended 2 3/4 cents higher at US$5.75, December soymeal settled US$0.50 higher at US$169.90 a short tonne, and December soyoil ended 28 points higher at 23.76 cent a pound.

 

The exhaustion of early selling pressure and bullish technical buy signals combined to lift futures, as the market found stability after three consecutive days of price weakness, said a CBOT commission house broker.

 

Carryover weakness from overnight price action, concerns over the spread of bird flu in Asia and Europe coupled with the allure of filling a chart gap served as the catalyst for futures to press lower initially.

 

However, as the session unfolded, futures found technical support at the bottom of a chart gap basis the November contract at US$5.66 1/2, attracting speculative and local buying that key keyed the session's recovery, traders added.

 

Otherwise, overall activity was fairly subdued, with spread rolling and the liquidation of nearby contracts featured attractions heading toward first notice day Oct. 31.

 

In demand, U.S. Department of Agriculture said soybeans inspected for export in the week ended Oct. 20 totaled 32.738 million bushels. The export figure was down from last week's 35.389 million and below the 43.378 million inspected at the same time last year. Analysts expected soybean inspections in a range of 28 million to 36 million bushels. Accumulated soybean export inspections for the 2005-06 marketing year total 113.969 million bushels, down from last year's 142.556 million at the same time.

 

USDA is scheduled to release its weekly crop progress report 3 p.m. CDT. Traders and analysts anticipate harvest progress between 85% and 90% complete.

 

In pit trades, Man Financial, RJ O'Brien, DT Trading and Citigroup were featured buyers, with ADM Investor Services, Bunge Chicago, Cargill and O'Connor the primary sellers. Man Financial spread 2,000 November/January, with Rosenthal, Refco and ADM Investor Services each spreading 1,000 January/November.

 

South American soybean futures ended mostly higher. The November futures settled 1 1/2 cent higher at US$6.38 1/2.

 

 

Soy Products

 

Soymeal futures ended marginally higher in a minor consolidation bounce, as talk of oversold conditions provided stability to prices. Concerns that the spread of bird flu through Asia and Europe would cut soymeal export demand cast a bearish cloud over prices initially, but once support held at Friday's low, technical and local buying emerged to underpin prices, traders said.

 

Soyoil futures staged a late rally, finishing with an outside higher close on technical charts. Futures managed to recover from early losses on technically based buying. Soymeal/soyoil spreading and weakness in the energy sector weighed on oil share for most of the day, until speculative buying surfaced after selling pressure was exhausted.

 

Talk of futures nearing oversold levels and domestic demand provided underpinning strength, with the ability of December futures to breach overhead resistance opening the door for a late push into chart gap left from Friday's price slide, analysts said.

 

December oil share ended at 40.95%, and the November/December crush was at 60 1/4 cents.

 

In soymeal trades, Man Financial, Merrill Lynch and Refco were key buyers while Citigroup and Fimat were featured sellers. In soyoil trades, Bunge Chicago, Cargill, Citigroup, Goldenberg Hehmeyer, and Tenco were buyers. Fimat, ABN Amro, Man Financial, RJ O'Brien, and Refco were key sellers.