October 30, 2007

 

CBOT Soy Review on Monday: Skips to 1-month high; inflation based buys

 

 

Chicago Board of Trade soybean futures ended Monday's session posting solid gains, rallying to one month highs on borrowed strength from outside inflationary markets.

 

November soybeans settled 15 1/2 cents higher at US$10.11 and January soybeans ended 15 1/2 cents higher at US$10.28 3/4. December soymeal settled US$2.20 higher at US$280.00. December soyoil finished 82 points higher at 42.20.

 

The combination of a lower U.S. dollar index coupled with a sharp rise in crude oil and metal futures sent inflationary signals through commodity markets, sparking upside momentum, analysts said.

 

The market continues to feed off the traditional inflation-based influences, with technical bullishness, and confirmation that exports remain strong keeping futures firmly underpinned, said Tim Hannagan, analyst with Alaron in Chicago.

 

From a technical standpoint, the market satisfied a near-term upside objective of closing prices above solid technical resistance at last week's high of US$10.25. Otherwise, futures had little other directives aside from borrowed strength from soyoil and spillover from a sharp bounce in wheat futures prices, analysts added.

 

However, fear of a possible turnaround Tuesday scenario, with the potential for end of the month profit taking lingering, managed to temper upside movement, as traders remain concerned that a market correction maybe looming, Hannagan added.

 

U.S. Department of Agriculture reported 32.224 million bushels of soybeans were inspected for export in the week ended Oct. 25. The figure is up 10.9% from the 29.053 million reported in the previous week. Analysts surveyed by Dow Jones Newswires projected the inspections to fall within a range of 28 million to 40 million.

 

The USDA is scheduled to release its weekly crop progress report Monday at 4 p.m. EDT. Analysts anticipate the U.S. soybean harvest at 75% to 80% complete.

 

The DTN Meteorlogix forecast calls for continued dry and harvest-friendly weather this week across the central U.S. This trend will be favorable for row crop harvest in the western and northern Midwest. The first part of November will bring continued dry and generally warm temperatures to the Midwest, Plains and Delta.

 

In Brazil's major soybean areas, recent rainfall has helped to improve conditions for early soybeans in Mato Grosso and Goias. However, this week looks to be drier and somewhat warmer. More rain will be needed to ensure favorable development of this part of the soybean crop. The new soybean areas of western Bahia look to continue drier and much warmer than normal during the week, Meteorlogix forecasts.

 

In pit trades, Tenco bought 500 January, and MF Global bought 300 January. Penson GHCO and UBS Securities each sold 300 January. Speculative fund buying was estimated between 3,000 and 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, with nearby soyoil futures soaring on spillover support from crude oil and Malaysian palm oil futures. Soyoil futures spiked to their highest level since November 1974. Continued price gains in crude oil futures is buoying speculative interest tied to world biodiesel demand, with increased usage of other world vegoils abroad making soyoil attractive amid its substitutability to palm oil, analysts said.

 

Soymeal futures ended higher, up in step with gains in the rest of the soy complex. Despite the gains, the market continued to lose product share to soyoil on spreads, analysts added.

 

December oil share ended at 42.97% and the November/December crush ended at 69 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, buyers were scattered among various commission houses, with speculative fund buying estimated in a range 4,000 to 5,000 lots. Fimat sold 300 December and 300 January, Fortis sold 400 May, and Iowa Grain and Shatkin/Arbor each sold 300 December.