October 27, 2006

 

CBOT Soy Review on Thursday: Settles higher; bullish momentum reignited

 

 

Chicago Board of Trade soybean futures ended higher Thursday, as speculative buying interest was rekindled amid a lack of selling pressure and spillover strength from soyoil.

 

November soybeans finished 5 3/4 cents higher at US$6.27 3/4, and January soybeans ended 6 1/4 cents higher at US$6.41 3/4. December soymeal settled US$0.90 higher at US$186.10 per short tonne, while December soyoil ended 46 points higher at 27.04 cents a pound.

 

Aggressive speculative fund buying served as the catalyst for the gains, with underlying demand strength, and ideas the market needs to rally to stay price competitive with corn and wheat bullish features, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

Futures' inability to extend overnight weakness awakened speculative buyers, with strength from soyoil futures spilling over to spark a recovery rally, traders said.

 

Speculative fund buying was the featured attraction, with bullish technical momentum continuing to fuel upward movement. Sellers remain unwilling to challenge the force of speculative buying, traders added.

 

Meanwhile, underlying demand continues to provide some fundamental support, with solid crushing margins and export sales remaining well above last year's pace, Hoops added.

 

However, some traders say world importers have scaled back purchases on the recent spike higher move, and next week's weekly export sales report will be watched closely to see if the market is pricing itself out of consumption.

 

In pit trades, Calyon Financial bought 500 November and 1,200 January; Fimat bought 500 November and 1,000 January; and JP Morgan bought 1,000 January. RJ O'Brien bought 800 January, and Man Financial and UBS Securities each bought 500 January. Speculative fund buying was estimated between 6,000 and 7,000 contracts.

 

Sellers were scattered among various commission houses. Fimat bought 3,100 Nov US$7.60 calls. Term Commodities bought 2,500 Jan US$6.00 puts and sold 2,500 US$5.50 calls.

 

Day session volume for soybeans on the e-CBOT platform totaled 45,803 contracts.

 

South American soybean futures ended higher, with the November futures settling 8 cents higher at US$6.90.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board.

 

Soyoil futures ended the day posting solid gains, buoyed by speculative buying. The market was underpinned by a friendly stocks number in the Census crush report, with technical strength a feature as well, said Hoops.

 

The December contract's inability to challenge Wednesday's lows in early action was seen as technically supportive, attracting speculative buyers, he added.

 

The Census Bureau said September soyoil stocks totaled 2.968 billion pounds compared to estimates of 3.018 billion pounds.

 

Soymeal futures ended higher, consolidating within Wednesday's wide trading ranges, with speculative buying surfacing after the buying filtered through the rest of the soy complex, analysts said.

 

December oil share ended at 42.08% and the November/December crush ended at 79 cents.

 

In soymeal trades, speculative funds were net buyers on the day. Buying and selling was widely scattered among various commission houses.

 

In soyoil trades, Fimat bought 1,300 December; Man Financial bought 500 December; Tenco bought 500 January; and Rand Financial was a buyer of 300 December and 300 March. Prudential Financial sold 800 December, and JP Morgan sold 300 December. Commercial firms were estimated buyers of nearly 2,000 contracts.