October 26, 2007

 

CBOT Soy Review on Thursday: Higher; rallies on inflation based buying

 

 

Chicago Board of Trade soybean futures ended higher Thursday, catapulting to one-week highs on inflationary based buying.

 

November soybeans settled 18 1/2 cents higher at US$9.94 3/4 and January soybeans ended 18 3/4 cents higher at US$10.12 1/2. December soymeal settled US$5.50 higher at US$279.50. December soyoil finished 44 points higher at 40.92 cents.

 

The market experienced an inflationary push, with a weaker U.S. dollar, and soaring crude oil and metals futures attracted speculative buyers, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Technically inspired buying was featured as well, with traders encouraged by the January contract's ability to settle above the US$10.00 per bushel level for the first time this week, a CBOT floor analyst said.

 

The inflationary aspect of the market was the key driver of prices, with spillover strength from the soy products aiding the gains amid the influence of crude oil on soyoil and export demand buoying soymeal, analysts added.

 

The theme was consistent, with end user buying, basis levels narrowing to attract soybean supplies and nearby November prices drawing near the US$10.00 strike price ahead of Friday's options expiration, encouraging speculative buyers as well, Roose added.

 

The DTN Meteorlogix forecast calls for mainly dry conditions through the next 10 days - into and past the end of October through the first weekend of November. The dry weather will allow row crop harvest to make good progress.

 

Meanwhile, a more favorable round of rainfall continues in effect in northern Brazil soybean areas. Widespread rainfall for Mato Grosso, Mato Grosso do Sul and southern Goias will help improve soil moisture for early soybeans. However, farther east, the new soybean areas of western Bahia look to continue drier and much warmer than normal during the next week or more, Meteorlogix reports.

 

In pit trades, ADM Investor Services bought 600 January, Tenco bought 500 January, Fimat bought 500 January, and RJ O'Brien bought 300 January. Rand Financial sold 500 January. Speculative fund buying was estimated near 5,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, propelling on inflation based buying with soybeans. Soyoil futures roared to one week highs, buoyed by speculative buying attributed to surging crude oil futures making biodiesel derived from soyoil more attractive, analysts said.

 

Soymeal futures rallied to over one-week highs, bolstered by speculative based inflationary and technical buying, analysts said. Higher-than-expected weekly export sales provided a fundamental boost to aide the higher tonnee and extend the bullish theme, analysts added.

 

U.S. Department of Agriculture reported weekly soymeal export sales were a net 244,500 tonnes, and soyoil commitments were 24,300 metric tonnes. Analysts had forecast sales between 75,000 and 175,000 metric tonnes.

 

December oil share ended at 42.26% and the November/December crush ended at 70 1/4 cents.

 

In soymeal trades, Fortis bought 600 December, and JP Morgan sold 500 January. Speculative fund buying was estimated at 2,000 lots.

 

In soyoil trades, ADM Investor Services bought 700 December, Fimat bought 1,000 December. RJ O'Brien sold 800 December and JP Morgan sold 300 December. Speculative fund buying was estimated between 2,000 and 3,000 lots.