November 8, 2006

 

CBOT Soy Review on Tuesday: Settles higher; speculative buying fuels gains

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, buoyed by speculative and local buying amid spillover support from corn and long-range demand prospects.

 

November soybeans finished 5 1/2 cents higher at US$6.54 3/4, and January soybeans ended 4 1/2 cents higher at US$6.67 1/4. December soymeal settled US$0.90 higher at US$197.40 per short tonne, while December soyoil ended 13 points higher at 27.67 cents a pound.

 

The investment community remains encouraged by perceptions that soybeans are in a race against corn for acres, and with a supportive long-range demand profile for oilseeds, the market remains firmly underpinned, said John Kleist of Top Third Ag Marketing in Chicago.

 

A quiet news front continued to keep technical features in play, with bearish nearby supplies overshadowed by bullish momentum filtering through the complex, traders added.

 

Market consensus that soybeans are underpriced in relation to corn coupled with the need to salvage 2007 acres as well as attract additional South American acres is providing a supportive story for speculative traders to feed on, analysts said.

 

This scenario is generating "the psychology that is right for soybeans to maintain its rhythm with corn futures," Kleist added.

 

Meanwhile, the potential for a bearish production and ending stock projection from the U.S. Department of Agriculture Thursday managed to restrain upside movement, traders said.

 

The average of analysts estimates taken from a survey compiled by Dow Jones Newswires for 2006-07 U.S. soybean production based on conditions as of Nov. 1 pegs the crop at 3.240 billion bushels. The estimates ranged from 3.193 billion to 3.316 billion bushels. The average of estimates pegged 2006-07 ending stocks at 583 million bushels. The estimates ranged from 520 million to 635 million bushels.

 

In pit trades, Fimat bought 1,200 January; Term Commodities bought 400 January; and Fortis and Calyon Financial each bought 500 January. Speculative fund buying was estimated at 2,000 contracts. Sellers were lightly scattered among various commission houses.

 

Day session volume for soybeans on the e-CBOT platform totaled 29,703 contracts.

 

South American soybean futures ended higher, with the November futures settling 5 cents higher at US$7.15.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, but remained in a sideways trading pattern. Both soymeal and soyoil garnered support from higher soybean prices with speculative buying managing to filter throughout the soy complex.

 

Soyoil futures managed to recover from earlier declines. Technical buying emerged after the December futures held support at the contract's 10-day moving average, traders said. Soymeal futures experienced two-sided price action, consolidating within the market's recent range in the absence of fresh market-moving news, traders added.

 

December oil share ended at 41.21% and the November/December crush ended at 84 cents.

 

In soymeal trades, speculative funds were net buyers on the day. JP Morgan was a featured buyer of 600 December. Rand Financial bought 300 December contracts. Bunge Chicago sold 300 December.

 

In soyoil trades, buyers and sellers were lightly scattered among various commission houses. Fortis bought 400 march and ADM Investor Services sold 300 January.