November 10, 2007

 

CBOT Soy Review on Friday: Rallies to new highs on outside support

 

 

Chicago Board of Trade soybean futures ended higher Friday, climbing to new contract highs on bullish underlying demand, spillover support from soyoil and crude oil and positive crop report data.

 

Nearby soybean futures rallied to their highest levels since May 2004 on continuation charts.

 

November soybeans settled 15 cents higher at US$10.43 and January soybeans ended 14 3/4 cents higher at US$10.56. December soymeal settled US$3.40 higher at US$281.80 per short tonne. December soyoil finished 93 points higher at 45.08 per pound.

 

The inflationary influence of outside markets continue to keep bullish momentum in soybeans, with weakness in the U.S. dollar promoting bullish demand prospects for the market, analysts said.

 

Expectations of higher crude oil prices through the end of the month amid a weaker dollar is a common theme attracting fresh speculative buyers, as index funds spread capital in dollar-denominated commodities, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

Strong underlying export demand, with buying from China announced for the second consecutive day and outlooks for another purchase to be reported Monday, buoyed futures as well, analysts said. The demand outlooks generated fundamental support, with slightly friendly crop data inspiring the market to lift prices to levels that will assure adequate soybean acreage in 2008, Hannagan added.

 

However, traders said the advances were a bit exaggerated on the rally, as thin volume raised questions about the sustainability of the gains, particularly with crude oil turning volatile, seemingly taking a breather as it approaches the benchmark US$100-a-barrel level, analysts added.

 

U.S. Department of Agriculture announced Friday private export sales of 115,000 metric tonnes of soybeans for delivery to China in the 2007-08 marketing year.

 

USDA pegged 2007-08 soybean production at 2.594 billion bushels versus the average of trade estimates at 2.606 billion. Soybean yield is projected at 41.3 bushels per acre, down 1/10 of a bushel from the October yield. USDA projected U.S. 2007-08 soybean ending stocks at 210 million bushels, down 5 million from the October forecast and below the average of trade estimates at 213 million bushels.

 

In pit trades, Speculative fund buying was estimated at 5,000 lots. FCStonnee bought 300 January, RJ O'Brien bought 400 January and UBS Securities bought 600 January. Tenco sold 300 January and 400 March, UBS Securities sold 300 January, and USA sold 1,000 January.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, led by a spike in soyoil prices to their highest levels in 33 years. Soyoil was energized by speculative-led buying, with spillover support from crude oil keeping longer-term bullish biodiesel outlooks flowing, analysts say. Solid underlying commercial buying and reports of strong global vegoils demand, particularly from China keep speculative buyers enthused, analysts added.

 

Soymeal futures ended higher as well, feeding off the bullish theme circulating through the soy complex. The market experienced the ups and downs of soybeans during the day, caught between the movements of outside markets, analysts said. Light oil/meal spreading helped limit upside moves, traders said.

 

December oil share ended at 44.44% and the November/December crush ended at 72 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.

 

In soyoil trades, Bunge Chicago bought 300 January, and JP Morgan bought 400 January. Speculative fund buying was estimated at 4,000 lots, with commercial buying estimated at 1,500 lots.