November 10, 2005

 

CBOT Soy Review on Wednesday: Edges higher in pre-crop-report trade

 

 

Soybean futures at the Chicago Board of Trade ended modestly higher Wednesday, supported by speculative short covering ahead of Thursday's U.S. government crop report, traders said.

 

November soybeans ended 4 cents higher at US$5.78 1/4, January soybeans finished 3 cents higher at US$5.88 1/2, December soymeal settled US$0.40 higher at US$174.30 a short tonne, and December soyoil ended 15 points higher at 22.96 cents a pound.

 

"It was a day of positioning, as traders squared trades ahead of the crop report, with light technically motivated buying adding to the day's price strength," said a CBOT commission house broker.

 

A quiet news front, anticipation of a bearish crop report and mounting concerns over bird flu and its impact on global feed demand pressured prices in early action.

 

However, the inability of futures to attract follow-through selling uncovered short-covering interest, with pre-placed buy-stop orders triggered once futures eclipsed resistance near US$5.89 - the January future's 50-day moving average.

 

The bulk of session's activity was absorbed in the first hour of trading, with prices settling into narrow trading ranges for the remainder of the day. Traders were seemingly unwilling to take on added risk heading into a major crop report.

 

"Heading into a report even gives you the second-best seat in the house," said a CBOT floor trader.

 

Analysts surveyed by Dow Jones Newswires expect the U.S. Department of Agriculture to bump up its U.S. soybean production forecast over the 3-billion-bushel mark in Thursday's November crop report amid harvest yield results coming in higher than expected. The average of analysts' estimates projects a crop size of 3.016 billion bushels with a yield of 42.3 bushels per acre. The average guess among analysts in the survey pegged the 2005-06 carryout at 313 million bushels from a range of 270 million to 351 million.

 

On tap for Thursday, USDA is scheduled to release its November crop production, supply and demand and weekly export sales reports at 7:30 a.m. CST (1330 GMT).

 

In pit trades, Fimat bought 1,000 January, Tenco bought 1,500 January, ABN Amro bought 600 January and Calyon Financial bought 500 January. Citigroup and Rand Financial each sold 500 January, and ABN Amro sold 300 January. Commodity fund buying was estimated at 3,000 contracts.

 

South American soybean futures ended higher across the board. The March futures settled 3 cents higher at US$6.18.

 

 

SOY PRODUCTS

 

Soymeal ended marginally higher, managing to stage a late recovery on end- of-the-day position squaring. Futures were under pressure most of the day from soyoil/soymeal spreading, bird flu worries and pre-report positioning.

 

Soyoil futures rebounded from early lows in unison with soybeans, benefiting from commercial buying and trade positioning.

 

December oil share ended at 39.71%, and the November/December crush was at 57 3/4 cents.

 

In soymeal trades, Calyon Financial bought 500 December, Fimat bought 300 December, and ADM Investor Services, Refco and Tenco each bought 200 December. Fimat sold 500 December, Rand Financial sold 800 December, and Bunge Chicago sold 300 March.

 

In soyoil trades, Bunge Chicago bought 200 December, Term Commodities bought 400 January, Fimat bought 300 December and 400 January, Iowa Grain bought 400 December, and RJ O'Brien and Tenco each bought 300 December.