November 2, 2005

 

CBOT Soy Review on Tuesday: Climbs, bouncing from prior losses

 

 

Soybean futures on the Chicago Board of Trade climbed Tuesday, staging a technical bounce from prior losses amid oversold conditions and seasonal buying trends.

 

November soybeans ended 9 3/4 cents higher at US$5.74 1/2, January soybeans finished 10 1/2 cents higher at US$5.86 1/2, December soymeal settled US$3.80 higher at US$173.50 a short tonne, while December soyoil ended 16 points higher at 23.02 cent a pound.

 

The market made a modest correction from a downtrend that has plagued the market since Oct. 17, said John Kleist of Kleist Ag Consulting.

 

Futures have essentially absorbed the bearish inputs of rising production estimates and big deliveries, opening the door for a post harvest and large delivery bounce, analysts said.

 

Talk of recent declines leaving futures a bit oversold, seasonal buying tendencies amid firming cash basis levels and a pickup in export demand provided the fundamental support for the session's gains.

 

However, analysts said technically inspired buying was the driver of prices, with spillover from soymeal adding strength as well.

 

Nevertheless, the entire soy complex failed to challenge meaningful resistance levels at their respective 50-day moving averages, stalling the upward move, as the markets reached levels where there were willing sellers waiting, added Kleist.

 

Lingering concerns over the impact of bird flu on soybean and soymeal demand was seen limiting upside potential as well.

 

In pit trades, Citigroup bought 1,000 January, Calyon Financial, Man Financial, and Merrill Lynch each bought 600 January, ABN Amro Refco and Tenco each bought 500 January. Cargill and Rand Financial each sold 400 January, Refco Investor Services sold 500 January. Commodity funds were estimated buyers of 5,000 contracts.

 

South American soybean futures ended higher across the board. The November futures settled 13 cents higher at US$6.42.

 

 

SOY PRODUCTS

 

Soymeal futures ended firm, rallying to two-week highs, emerging as the strongest link in the soycomplex. Technical buying and solid underlying domestic demand served as the catalysts to bolster the gains, but as in soybeans, the inability of active contracts to challenge overhead resistance capped upward movement.

 

Meal was a leader Tuesday, but it needs strong fundamental legs to sustain the price strength, said Kleist.

 

Soyoil futures finished higher, supported by strength from soybeans and commercial buying. However, the unwinding of soyoil/soymeal spreads, lingering concerns over larger than expected nearby stocks and the lack of buyers as the futures neared key resistance levels put a lid on advances.

 

December oil share dropped to 39.88%, and the November/December crush was at 60 1/2 cents.

 

In soymeal trades, Man Financial, Rand Financial and JP Morgan each bought 600 December, Refco Investor Services bought 400 December and Prudential Financial bought 300 December. RJ O'Brien sold 500 December, Prudential Financial and Refco each sold 300 December. Commodity fund buying was pegged at 1,600 contracts.

 

In soyoil trades, Bunge Chicago, bought 600 December, Cargill bought 500 December, Iowa Grain, Man Financial and Tenco each bought 400 December and Citigroup bought 500 May. Calyon Financial sold 1,000 December, Bunge Chicago sold 500 December, Cargill sold 400 January, Citigroup sold 600 December.