November 3, 2006

 

CBOT Soy Review on Thursday: Ends higher; but profit taking cuts gains

 

 

Chicago Board of Trade soybean futures ended Thursday's session posting modest gains, well off earlier highs, as the market trimmed advances on profit taking pressure.

 

November soybeans finished 3 1/4 cents higher at US$6.48 1/4, and January soybeans ended 13 cents higher at US$6.61 1/4. December soymeal settled US$2.20 higher at US$195.30 per short tonne, while December soyoil ended 3 points higher at 27.50 cents a pound.

 

The speculative community ran the market up to new contract highs initially, but in the face of bearish fundamentals, the combination of farmer selling and heavy South American selling in deferred contracts enticed speculative funds to take some money off the table, said Jack Scoville, analyst with the Price Futures Group in Chicago.

 

Spillover momentum from limit up corn prices and ideas soybeans need to rally in unison with corn to secure ample acreage in 2007 as well as in South America served as the catalyst for the early gains, traders said. However, as corn pulled off its highs, the market's fundamental picture pointed to excellent selling opportunities for traders, farmers and hedgers to take advantage of, analysts added.

 

Bullish technical momentum was a catalyst for the gains, with the hesitancy of traders to step in front of the bullish fervor in the market helping prices climb to new highs. However, farmers began to take advantage of the higher prices, with Brazilian hedging rushing in to stem the tide of the losses once fund buying was exhausted after satisfying upside objectives, traders said.

 

Deferred contracts from the July 2007 future through the November 2007 future all climbed above the US$7.00 per bushel level during the session.

 

In pit trades, UBS Securities bought 1,200 January, JP Morgan bought 1,000 January, and Fimat bought 1,000 March. Citigroup, Iowa Grain, Fortis, Prudential Financial, RJ O'Brien and Rand Financial each bought 500 January. Speculative fund buying was estimated between 4,000 and 5,000 contracts.

 

On the sell side, Calyon Financial sold 2,000 January, JP Morgan and RJ O'Brien each sold 1,000 January.

 

Day session volume for soybeans on the e-CBOT platform totaled 47,984 contracts.

 

South American soybean futures ended higher, with the November futures settling 3 cents higher at US$7.08.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, but finished well off early highs. Soymeal futures propelled higher on technically inspired speculative buying, with nearby contracts rallying to their highest levels since January. Speculative buying was the key driver of prices, with spillover strength from soybeans extending the gains before profit taking emerged to trim advances, traders said. The active December contract briefly climbed above the US$200.00 per short tonne level.

 

Soyoil futures ended marginally higher, setting back from multi-month highs set earlier in the day. Trade consolidation following an early run to new move highs, took the edge off the bullish tonnee, as speculative traders booked some profits down the stretch, analysts said.

 

December oil share ended at 41.32% and the November/December crush ended at 84 cents.

 

In soymeal trades, Prudential Financial bought 2,000 December, JP Morgan bought 800 December and Fortis bought 3,000 December. Speculative funds were estimated buyers of 4,000 contracts.

 

In soyoil trades, buyers and sellers were widely scattered among various commission houses. JP Morgan bought 700 December, Rand Financial bought 600 December, Man Financial and ADM Investor Services each bought 500 December. JP Morgan sold 500 January, with RJ O'Brien a seller of 400 December and Bunge Chicago a seller of 300 January.