October 25, 2006

 

CBOT Soy Review on Tuesday: Continues upward trend on technical buying

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, continuing their ascent on the backs of technically inspired speculative buying.

 

November soybeans finished 6 cents higher at US$6.23 1/2, and January soybeans ended up 6 1/2 cents at US$6.37. December soymeal settled US$2.70 higher at US$185.60 per short tonne, while December soyoil ended 8 points higher at 26.64 cents a pound.

 

A quiet news front kept technical considerations in play, as bullish momentum, spillover strength from rallying corn and wheat futures as well as the supportive structure in the soy products kept soybeans firmly underpinned, analysts said.

 

The market targeted near term technical objectives during the day, climbing to the highest level for a spot month soybean future since August 2005. Lingering concerns that the market remains under priced in relation to corn and wheat rallies helped sustain the advances also, traders added.

 

Nevertheless, the market ran into formidable resistance at the US$6.25 level basis the November future.

 

The market's climb was tempered by a 1 to 2 cent slip in Gulf basis levels as well as the attraction of farmer sales at lofty price levels in the face of record supplies, said Mike Zuzolo, senior analyst with Risk Management Commodities Inc. in Lafayette Ind. The 85 cent gains in futures and 15 cent jump in the cash basis are attractive to farmers and may produce a near term top in the market, he added

 

Meanwhile, the key to the sustainability of the rally will be export demand, with traders watching closely to see if the world's number one soybean importer-China steps back its buying interest at current levels, Zuzolo added.

 

In pit trades, speculative fund buying was estimated at 2,000 contracts. Buying interest was widely scattered among various commission houses, with Calyon Financial, Man Financial and RJ O'Brien key buyers. Sellers were scattered among various firms as well.

 

The November/January spread was actively traded, with RJ O'Brien spreading 3,000 lots, JP Morgan 1,500 lots and ADM Investor Services spring 1,000 lots.

 

Day session volume for soybeans on the e-CBOT platform totaled 50,307 contracts.

 

South American soybean futures ended higher, with the November futures settling 6 cents higher at US$6.93 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board. Soymeal futures ended a two-sided session on firm footing, with nearby contracts rallying to 4-month highs in unison with price strength in soybeans, analysts said. Technically inspired buying coupled with underlying demand profiles served as positive influences to keep futures charging with soybeans, traders added.

 

Soyoil futures ended higher, but well off early highs. The market lost product share to soymeal, as spreading between the products trimmed earlier gains, traders said. Meanwhile, borrowed strength from crude oil and long range demand profiles remained underlying features to keep a floor under prices, analysts added.

 

December oil share ended at 41.78% and the November/December crush ended at 77 3/4 cents.

 

In soymeal trades, Speculative funds were estimated buyers of 2,000 lots. JP Morgan bought 500 December and 1,000 January, with Fimat a buyer of 500 December. JP Morgan sold 500 December.

 

In soyoil trades, JP Morgan bought 700 December, Bunge Chicago bought 400 January, and Rand Financial bought 500 December. Speculative funds were estimated buyers of 2,000 lots. Fimat sold 500 December, with Bunge Chicago and JP Morgan each sellers of 300 December.