November 7, 2007

 

CBOT Soy Review on Tuesday: Soar to 3-year highs on inflationary buys

 

 

Chicago Board of Trade soybean futures ended sharply higher Tuesday, rallying to 3-year highs on speculative led buying tied to inflationary fears.

 

November soybeans settled 23 3/4 cents higher at US$10.29 1/2 and January soybeans ended 23 1/2 cents higher at US$10.44 1/2. December soymeal settled US$7.70 higher at US$284.60 per short tonne. December soyoil finished 106 points higher at 43.62 per pound.

 

A dearth of fresh fundamental news kept traders focused on outside influences, with soaring metal futures, record high crude oil prices and weakness in the U.S. dollar promoting broad-based commodity wide buying, said Vic Lespinasse, an analyst with Illinois Grain.

 

The market will probably stay focused on outside influences until the release of fresh fundamental data in Friday's U.S. Department of Agriculture crop reports, he added.

 

Speculative led buying was a featured attraction with spillover support from soyoil aiding the higher tonnee as well, amid record high crude oil and Malaysian palm oil futures bolstering price strength in soyoil, analysts added.

 

Otherwise, futures had little directives, with the unwillingness of sellers to stand in front of the speculative push keeping prices in an uptrend, traders said. Bullish technical momentum energized the market as well, with upward momentum feeding off itself to promote new contract highs in prices, traders added.

 

USDA is scheduled to release its final crop production report of year based off conditions as of Nov. 1, Friday. The average of analysts estimates from a Dow Jones Newswires survey peg U.S. soybean production at 2.606 billion bushels with a yield of 41.5 bushels an acre. The estimates are slightly above October USDA projections of 2.598 bushels with a yield of 41.4 bushels an acre. The average of estimates for the 2007-08 carryout is 213 million bushels, down slightly from the October USDA estimate of 215 million.

 

The DTN Meteorlogix weather forecast said South America's crop weather pattern remains mostly favorable for crops. There are some trouble spots emerging, however. In Brazil soybean areas, Goias, Minas Gerais, Sao Paulo and Bahia are no more than 10% planted relative to about 30% average due to dryness. Brazil soybean planting is about 23% complete nationwide, which is a bit slower than last year. Mato Grosso is about 50% planted. Parana is around 30% planted.

 

In Argentina, weather conditions are generally beneficial for planting and early seedling development. Argentina soybeans are around 20% planted as of last weekend, Meteorlogix reports.

 

In pit trades, speculative led buying was estimated 8,000 lots. ADM Investor Services, Fimat and Tenco each bough 500 January, RJ O'Brien bought 400 January, and FC Stonnee and Citigroup each bought 300 January. Rand Financial sold 1,000 January.

 

 

SOY PRODUCTS

 

Soy product futures ended sharply higher, with soyoil rising to new 33-year highs. Soyoil futures soared on the bullish influence of broad based commodity buying, with record highs set in crude oil and Malaysian palm oil futures uncovering fresh speculative led buying, analysts said.

 

Soymeal futures climbed to new 1-month highs, feeding off the bullish influence of soybeans. Speculative led buying kept the market underpinned, with commodity wide price strength filtering in to attract fresh fund buying interest, analysts added.

 

December oil share ended at 43.39% and the November/December crush ended at 76 1/2 cents.

 

In soymeal trades, spec fund buying was estimated at 2,000 lots, with ADM Investor Services buying 400 January, and Fimat buying 300 December. JP Morgan sold 500 January.

 

In soyoil trades, Speculative fund buying was estimated at 5,000 lots. ADM Investor Services bought 500 December and 400 January, Fimat bought 400 December, Iowa Grain and JP Morgan each bought 300 December. Sellers were scattered among various commission houses.