November 9, 2006

 

CBOT Soy Review on Wednesday: Rallies on speculative buys, corn spillover

 

 

Chicago Board of Trade soybean futures ended Wednesday's session posting solid gains, buoyed by speculative buying, with spillover strength from corn futures underpinning prices.

 

November soybeans finished 11 1/2 cents higher at US$6.66 1/4, and January soybeans ended 10 3/4 cents higher at US$6.78. December soymeal settled US$3.60 higher at US$201.00 per short tonne, while December soyoil ended 5 points higher at 27.72 cents a pound.

 

Market perceptions that soybeans remain under-priced in relation to corn, as well as talk of the need to buy South American acres amid outlooks for lower 2007 U.S. acreage, fed bullish enthusiasm, analysts said.

 

Futures propelled to new contract highs, with technical considerations featured in the absence of fresh market-moving news, traders said. The speculative push enabled futures to remain immune to bearish production and stock forecasts, with supportive long-range demand prospects helping underpin the market, a CBOT trader added.

 

The constant flow of fresh speculative buying has taken the market by storm, with sellers content to sit on the sidelines as fundamentals remain on the backburner in the near term, the trader added.

 

The squaring of positions ahead of Thursday's reports and the exhaustion of buying after the market satisfied a near-term technical objective of setting new highs allowed futures to trim advances. However, bullish momentum remains in place, with traders questioning whether Thursday's report will have a significant impact of price direction.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release its crop production, supply/demand and weekly export sales reports 7:30 a.m. CST.

 

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 bushels 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.

 

Analysts surveyed by Dow Jones Newswires estimate soybean commitments in the 500,000- to 700,000-metric-tonne range.

 

In pit trades, buyers and sellers were widely scattered among various commission houses. Speculative funds were net buyers of between 1,000 and 2,000 contracts.

 

Day session volume for soybeans on the e-CBOT platform totaled 36,422 contracts.

 

South American soybean futures ended higher, with the November future settling 11 1/4 cents higher at US$7.26 1/4.

 

 

SOY PRODUCTS

 

Soy product futures ended higher in unison with soybeans. Soymeal futures were the upside leader, gaining product share on speculative-led buying. Bullish technical momentum helped extend soymeal gains, with the nearby December contract rallying to its highest level since December 2005, traders said.

 

Soyoil futures ended higher, feeding off spillover support from soybeans and crude oil as well as underlying support from longer range demand prospects associated with biodiesel expansion.

 

December oil share ended at 40.81% and the November/December crush ended at 80 3/4 cents.

 

In soymeal trades, speculative fund buying was estimated near 5,000 contracts. Prudential Financial bought 2,000 December, Fortis bought 1,000 December, ADM Investor Services bought 700 January and Man Financial bought 500 December. Sellers were lightly scattered among various houses.

 

In soyoil trades, speculative funds were estimated buyers of 3,000 contracts, with buyers and sellers scattered among various commission houses.