November 16, 2007

 

CBOT Soy Review on Thursday: Mixed; fundamentals battle outside markets

 

 

Chicago Board of Trade soybean futures ended narrowly mixed Thursday, torn between weakness in outside inflationary markets and supportive underlying fundamentals, analysts said.

 

November soybeans settled 3/4-cent lower at US$10.78 3/4 and January soybeans ended 1/4-cent higher at US$10.94 1/4. December soymeal settled US$1.10 higher at US$293.50 a short tonne. December soyoil finished 39 points lower at 44.66 cents a pound.

 

Futures managed to carve out contract highs, with speculation on market fundamentals underpinning prices, while declines in crude oil and metals as well as a higher U.S. dollar index attracted profit-taking pressure, said John Kleist, analyst with Kleist Ag Consulting.

 

The setback in outside inflationary markets took some edge off prices for most of the day, but with a new wrinkle of consistent Chinese buying in the up-move, futures remained underpinned, Kleist said.

 

The market is seemingly going to levels that will ration demand, with tighter carryout projections, the need to buy 2008 U.S. acres and the uncertainty of Brazilian acreage expansion keeping beans in a bullish trend, analysts said.

 

However, ideas that the recent run to new highs has futures overbought and the influence of outside markets applied weakness to entice some participants into taking some profits, a CBOT floor broker said.

 

The U.S. Department of Agriculture announced Thursday that private exporters reported the sale of 110,000 metric tonnes of soybeans to China for delivery in the 2007-08 marketing year.

 

On tap for Friday, the USDA is scheduled to release weekly export sales figures for the week ended Nov. 8 at 8:30 a.m. EST. Trade estimates put soybean export sales at 600,000 to 850,000 metric tonnes. Soymeal sales are projected in a range of 150,000 to 350,000 metric tonnes, with soyoil sales expected in a range from 5,000 to 15,000 tonnes.

 

USDA's sales report, which is normally released on Thursdays, was delayed due to Monday's Veterans Day holiday.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative funds net sellers on the day.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal setting contract highs. Soymeal futures managed to divorce themselves away from the defensive tonnee in soyoil, benefiting spillover from soybeans, analysts said. Underlying demand coupled with oil/meal spread unwinding served as catalysts to push prices to new highs following early selling pressure, traders said.

 

Soyoil futures stumbled lower, backpedaling in unison with declines in crude oil futures. Soyoil remains intertwined with the energy sector, with strong global vegoil demand amid a growing worldwide biofuel industry keeping crude oil as a key influence on prices, analysts said. Profit-taking was a featured attraction, but underlying demand limited declines, analysts said.

 

December oil share ended at 43.21% and the December/January crush ended at 67 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, Bunge Chicago bought 200 January, 200 December and 200 March; JP Morgan bought 200 December and 200 January and Fimat bought 300 December. Bunge Chicago sold 200 December, Citigroup sold 200 May and Iowa Grain and MF Global each sold 300 December. Speculative fund selling was estimated at 2,000 lots.