October 31, 2006

 

CBOT Soy Review on Monday: Ends higher; speculative buying supports prices

 

 

Chicago Board of Trade soybean futures ended higher Monday, as underlying speculative buying remained a supportive influence to propel prices to higher levels.

 

November soybeans finished 4 1/4 cents higher at US$6.39 3/4, and January soybeans ended 4 1/4 cents higher at US$6.53 1/4. December soymeal settled US$3.90 higher at US$191.60 per short tonne, while December soyoil ended 23 points lower at 27.27 cents a pound.

 

Technical momentum was a driving force in the market's upside movement, as speculative funds continue to add length amid ideas prices are undervalued in relation to corn and wheat, analysts said.

 

Nearby futures settled at the highest level for a spot-month contract on a continuation basis since August 2005. The bullish technical tonnee has allowed futures to remain immune to normal fundamental influences, with traders looking at a need to attract additional South American or U.S. acres in spring 2007 as an underpinning current for prices.

 

However, soybeans did experience some ups and downs, with the inability of the market to challenge overnight highs attracting some profit taking and end- of-the-month positioning pressure, traders said.

 

Meanwhile, the U.S. Department of Agriculture reported 48.630 million bushels of soybeans were inspected for export in the week ended Oct. 26. The export figure was up 34.5% from the previous week. Analysts surveyed by Dow Jones Newswires projected the inspections to fall within a range of 25 million to 35 million bushels. Accumulated soy inspections total 208.561 million bushels, up 32.2% from the 157.820 million bushels reported at the same time last year.

 

After the close, at 3 p.m. CST, USDA is scheduled to release its weekly crop progress report. Analysts surveyed by Dow Jones anticipate the harvest pace between 80% and 85% complete.

 

Deliveries against CBOT November soybeans on first notice day Tuesday are expected to be heavy, analysts say. Analysts expect deliveries against the CBOT November soybean contract to fall in a range of 500 to 1,500 lots, with most analysts leaning toward a range of 800 to 1,200 lots. As of 4 p.m. CDT Friday, 2,791 contracts were registered for delivery at CBOT-approved warehouses.

 

In pit trades, Fimat bought 1,500 January, ADM Investor Services bought 600 January, and RJ O'Brien and Stern each bought 500 November. Rand Financial bought 400 January and UBS Securities 400 January and 400 July. Speculative fund buying is estimated at 4,000 lots.

 

Citigroup sold 500 January and Iowa Grain sold 400 January, with Man Financial, JP Morgan, Rand Financial and UBS Securities each sellers of 300 January.

 

Day-session volume for soybeans on the e-CBOT platform totaled 40,631 contracts.

 

South American soybean futures ended higher, with the November futures settling 8 cents higher at US$7.05 1/2.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed. Soymeal futures ended higher across the board, spiking to a new high for the current move. Speculative-led buying served as the catalyst for the gains, with price strength in soybeans, technical momentum and the unwinding of soyoil/soymeal spreads supportive features. The nearby December contract rallied to its highest level since February and the highest level for the spot month since January on a continuation basis.

 

Soyoil stumbled lower on speculative selling amid spillover pressure from crude oil futures and the exhaustion of buying interest after nearby futures climbed to nearly three-month highs, analysts said.

 

December oil share ended at 41.58% and the November/December crush ended at 81 3/4 cents.

 

In soymeal trades, buyers and sellers were widely scattered among various commission houses, with Tenco buying 1,000 December and RJ O'Brien buying 400 December. ADM Investor Services sold 600 January, while Fimat and USA each sold 500 January. Speculative funds were estimated buyers of 5,000 contracts.

 

In soyoil trades, buyers were widely scattered among commission houses, with JP Morgan and Tenco each buyers of 700 December, Bunge Chicago buying 600 December and Calyon Financial buying 400 December. Iowa Grain sold 500 December, and Tenco sold 2,300 December and 400 July. Speculative finds were estimated sellers of 2,000 contracts.