November 2, 2006

 

CBOT Soy Review on Wednesday: Rallies to new highs on speculative buying

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, rallying to new contract highs, as speculative buyers returned to rekindle upside momentum.

 

November soybeans finished 14 3/4 cents higher at US$6.45, and January soybeans ended 14 cents higher at US$6.58 1/4. December soymeal settled US$3.50 higher at US$191.10 per short tonne, while December soyoil ended 64 points higher at 27.47 cents a pound.

 

"It was a technical push once again, as speculative buyers remained consistent with prior actions of rallying prices the day after a session of lower price action," said a CBOT commission house broker.

 

The nearby November contract soared to the highest level for a spot month futures since August 2005 and the most-active January futures set a new contract high at US$6.59 1/2.

 

The market propelled to new highs for the move, with technical considerations featured in the absence of fresh market-moving news, traders said. Market perceptions that soybeans remain under-priced in relation to corn and wheat, as well as talk of the need to buy South American acres amid outlooks for lower 2007 U.S. acreage, underpinned prices, traders added.

 

The market managed to bounce back from Tuesday's profit-taking losses, as speculative buyers returned to the market after booking profits at month end Tuesday. Upside movement remains the path of least resistance, as sellers remain hesitant to step in front of the loaded guns of speculative funds, a CBOT analyst added.

 

Meanwhile, traders will closely monitor Thursday's export sales report, as the market looks to see if the 82-cent speculative rally during October has chased away world import demand, analysts said.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release its weekly export sales report 7:30 a.m. CST. Analysts surveyed by Dow Jones Newswires estimate soybean commitments in the 550,000- to 800,000-metric-tonne range.

 

In pit trades, Calyon Financial bought 1,000 January, UBS Securities bought 900 January, and Man Financial bought 800 January. Speculative funds were estimated buyers of 5,000 contracts.

 

Day-session volume for soybeans on the e-CBOT platform totaled 40,744 contracts.

 

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

 

 

SOY PRODUCTS

 

Soy product futures launched an upward assault in unison with soybeans. Soymeal climbed to multi-month highs on the backs of a technical push and spillover momentum from soybeans, analysts said. The nearby December future rallied to its highest level since February, but still managed to lose product share at the expense soaring soyoil prices, traders added.

 

Soyoil futures ended sharply higher, bouncing back from Tuesday's losses on speculative buying. The market remains energized by the prowess of speculative buyers, with longer-range demand prospects underlying features, analysts said.

 

December oil share ended at 41.56% and the November/December crush ended at 82 cents.

 

In soymeal trades, buyers and sellers were widely scattered among various commission houses. JP Morgan bought 1,000 December, with Fortis and Tenco each buyers of 500 December. Speculative funds were estimated buyers of 4,000 contracts.

 

In soyoil trades, JP Morgan bought 800 December, RJ O'Brien bought 600 December, and Man Financial bought 400 December. Calyon Financial and Citigroup each bought 300 December, with Fimat a buyer of 300 January. Tenco sold 600 December. Speculative fund buying was estimated at 4,000 contracts.