October 27, 2007

 

CBOT Soy Review on Friday: Up; hedge sales trims early speculative buys

 

 

Chicago Board of Trade soybean futures ended mostly higher Friday, as late hedge-related selling trimmed inflationary based gains booked earlier in the day.

 

November soybeans settled 3/4 cent higher at US$9.95 1/2 and January soybeans ended 3/4 cent higher at US$10.13 1/4. December soymeal settled US$1.70 lower at US$277.80. December soyoil finished 46 points higher at 41.38.

 

The market was initially swept up in the "inflation Tsunami," rallying to new highs for the month on surging crude oil and metals futures tied to weakness in the U.S. dollar, said Vic Lespinasse, analyst with Illinois Grain.

 

The theme was consistent for most of the day, with technically based buying adding support to prices, analysts said. However, as the day unfolded, domestic and South American hedge pressure surfaced to trim advances heading down the stretch, analysts added.

 

Meanwhile, a late profit-taking pullback in crude oil futures applied further pressure to extend the setback, with end-of-the-week profit-taking and technical sales weighing on prices heading into the close, traders said.

 

Nevertheless, the market continues to maintain a bullish longer-term view, but ahead of an active harvest weekend and nearby prices near the US$10.00 level, it appeared to be a good selling opportunity, a CBOT floor broker said. Otherwise, traders were keeping a close eye on the November US$10.00 soybean option strike on Friday's expiration.

 

During the next week to 10 days, the DTN Meteorlogix forecast calls for dry weather and normal to above-normal temperatures across the central U.S. This trend will be favorable for row crop harvest in the western and northern Midwest, and will allow winter wheat planting in the Plains to make good progress. In the eastern Midwest, recent rains will help in terms of some soil moisture re-charge after a very dry and hot late summer.

 

Recent rainfall in northern Brazil soybean areas has been beneficial. However, the trend turns drier in Mato Grosso, Mato Grosso do Sul and Goias during the coming week. Conditions now are setting up to be drier and somewhat hotter for at least the next five to seven days. After that, showers may redevelop. The new soybean areas of western Bahia look to continue drier and much warmer-than-normal during the next week or more.

 

On Monday, U.S. Department of Agriculture is scheduled to release its weekly export inspections report at 11 a.m. EDT and weekly crop progress report at 4 p.m. EDT.

 

In pit trades, speculative fund buying was estimated at 4,000 lots. JP Morgan bought 1,000 January, Fimat, Iowa Grain, and MF Global each bought 500 January, and RJ O'Brien bought 400 January. Tenco sold 700 November and Bunge Chicago sold 500 January.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil carried higher on spillover support from a price surge in crude oil futures. Soyoil futures carved out new contract highs Friday, rallying on speculative-led buying attributed to bullish demand outlooks, as soaring crude oil futures make biodiesel more attractive, analysts said. Nearby futures set new 23-year highs on continuation charts, as inflationary buying engulfed commodities in general, traders added.

 

Soymeal futures ended lower, succumbing to oil/meal spreading as soaring crude oil prices lifted soyoil to new highs. An absence of fresh fundamental news coupled with a late drawback in soybean values down the stretch attracted profit-taking selling after the market carved out multi-week highs earlier, analysts said.

 

December oil share ended at 42.69% and the November/December crush ended at 70 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses. Speculative fund buying was estimated at 1,000 lots.

 

In soyoil trades, ADM Investor Services bought 500 December and Rand Financial bought 500 September. Bunge Chicago sold 500 December. Speculative fund buying was estimated at 3,000 lots.