November 21, 2006

 

CBOT Soy Review on Monday: Ends up on technical buys; but well off highs

 

 

Chicago Board of Trade soybean futures ended higher Monday, carving out solid gains on technical buying and borrowed momentum from higher corn futures.

 

January soybeans finished 7 cents higher at US$6.67 1/2, and March soybeans ended 7 1/4 cents higher at US$6.80. December soymeal settled US$1.50 higher at US$191.90 per short tonne, while January soyoil ended 43 points higher at 29.13 cents a pound.

 

The market's gains were technical in nature, with strong reaction to Friday's firm close attracting speculative buying, analysts said.

 

Futures were a follower of corn to the upside, with technical incentives and support from strong gains in soyoil serving as the catalysts to underpin prices, said Chad Henderson, analyst with Prime Agricultural Consultants in Brookfield, WI.

 

Soybeans retreated to end well off its initial highs, backpedaling on profit-taking, after the initial run up to session highs lost momentum, analysts said. Without any fresh news or extension of gains in corn, advances began to fade on position squaring ahead of the Thanksgiving holiday, traders added.

 

Meanwhile, the market did not have enough support to push it to new highs, with disappointment over lower than expected export inspections and no follow through near recent highs making upside momentum look tired, added Henderson.

 

The U.S. Department of Agriculture reported 25.858 million bushels of soybeans were inspected for export in the week ended Nov. 16. The export figure is down 31.1% from the previous week's 37.551 million bushels. Analysts surveyed by Dow Jones Newswires projected the inspections to fall within a range of 30 million to 42 million bushels.

 

The DTN Meteorlogix weather forecast said this week brings a relaxing of the shower pattern that bought up to seven inches of rain to southern Brazil in the past weekend. Mato Grosso will not be as hot as last week; however, temperatures will still be in the 90s Fahrenheit. There is a chance for moderate rain showers in Mato Grosso this coming weekend, and this possibility will bear close monitoring due to its importance following the recent heat wave.

 

Argentina's primary soybean areas will continue to be dry through the end of this week. A new round of showers is forecast for the coming weekend. Argentina's crop conditions are generally favorable for row crops at this time, Meteorlogix reports.

 

In pit trades, RJ O'Brien and UBS securities each bought 400 January, Prudential Financial, Rand Financial and Goldenberg Hehmeyer each bought 300 January. Shatkin/Arbor bought 500 January. Speculative fund buying was estimated 2,000 contracts.

 

On the sell side, UBS Securities sold 1,000 January, Tenco and JP Morgan sold 500 January, Calyon Financial and Rand Financial each sold 300 January.

 

Day session volume on the e-CBOT platform was 31,530 contracts.

 

 

SOY PRODUCTS

 

Soy product futures began the week producing solid rallies. Soyoil futures were upside leader of the products, soaring to new contract highs on speculative buying. The market was buoyed by price strength in world vegetable oil markets amid the global hype surrounding bio fuel enthusiasm, analysts said. Despite the market finishing well off its session highs, the rally was impressive in the face of declining crude oil prices in recent weeks, said Henderson.

 

Soymeal futures ended higher, following on the heels of soybeans. However, the absence of fresh supportive features to promote bullish enthusiasm allowed futures to lose product share in the face of sharply higher soyoil futures, analysts said.

 

December oil share ended at 42.80% and the December/January crush ended at 70 1/2 cents.

 

In soymeal trades, Fimat bought 1,000 January and Man Financial bought 300 December. Bunge Chicago sold 300 December and 300 January. Speculative funds were net buyers on the day.

 

In soyoil trades, Speculative funds were estimated buyers of 4,000 contracts, with Tenco buying 1,100 January, Fimat buying 500 January, and JP Morgan bought 300 January. Rand Financial sold 500 January, Bunge Chicago sold 300 January, and JP Morgan sold 300 December, 300 March and 300 May.