November 21, 2007
CBOT Soy Review on Tuesday: Rallies on demand; outside market support
Chicago Board of Trade soybean futures ended Tuesday's session posting solid gains, catapulting higher on demand strength and borrowed momentum from rallies in soyoil and crude oil futures.
January soybeans settled 16 1/2 cents higher at US$10.87 and March soybeans ended 16 1/4 cents higher at US$11.03 1/2. December soymeal settled US$2.30 higher at US$290.00 per short tonne. December soyoil finished 92 points higher at 45.72 cents per pound.
The combination of formidable export demand from China and the bullish influence of strength from outside inflationary markets provided underlying fundamental and technical strength, said John Kleist, analyst with Kleist Ag Consulting.
The absence of any aggressive selling aided the pop in the market, with a late surge in crude oil energizing soyoil bulls and subsequently keeping soybeans in a bullish theme down the stretch, traders added.
Nevertheless, the market is receiving a double dose of supportive features, with fresh sales to China providing the fundamental spark and outside influences keeping the speculative sector enthused, traders said. However, the inability of the market to challenge contract highs did raise some cautionary thoughts that upside could be limited heading into the shortened trading sessions the remainder of the week, traders added.
CBOT grain and oilseed market close at 1 p.m. EST Wednesday and Friday, and will be closed Thursday in observance of the Thanksgiving Day holiday.
The DTN Meteorlogix weather forecast said both Brazil and Argentina have favorable crop weather conditions through the next three days. During the latter part of the week, a new round of moderate to heavy rain is in store for southern Brazil into Argentina. The rain could produce some flooding in southern Brazil soybean areas of Rio Grande do Sul and Parana. Mato Grosso in the north continues to have a favorable weather outlook through the next seven days for its soybean crop.
In other news, Argentina shipped 1,550,631 metric tonnes of soybeans in September, up 223% from the 479,832 exported in September 2006, according to the latest Agriculture Secretariat data. China was the leading buyer of Argentine soybeans in September, purchasing 1,306,712 tonnes. Argentina shipped 509,737 metric tonnes of soyoil in September, down from 528,327 tonnes shipped the same month a year earlier.
The U.S. Department of Agriculture announced Tuesday private exporters reported the sale of 107,000 metric tonnes of soybeans for delivery to China in the 2007-08 marketing year. Additionally, 20,000 tonnes of U.S. soyoil were sold to China for delivery in the 2007-08 by private exporters, USDA reported.
In pit trades, ADM Investor Services bought 500 January and MF Global bought 300 January. Tenco sold 1,000 November. Speculative fund buying was estimated at 4,000 lots.
SOY PRODUCTS
Soy product futures ended higher, with soyoil catapulting to new contract highs on bullish export demand and soaring crude oil futures. Speculative buying was a featured attraction, as investment money continues to flow into the market on bullish speculative long-range demand outlooks amid biofuel potential due to rising crude oil prices and a steady dose of export demand from China, analysts said.
Soymeal futures ended higher, feeding off the bullish tonnee filtering through the soy complex, analysts said. However, the market lost product share to soyoil on spreads amid a lack of fresh fundamental news to ignite aggressive buying in the market, analysts added.
December oil share ended at 44.08% and the December/January crush ended at 54 cents.
In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 1,000 lots.
In soyoil trades, ADM Investor Services bought 300 December and 500 January, Tenco bought 600 March and Fimat bought 500 December. Sellers were lightly scattered among various commission houses. Speculative fund buying was estimated at 6,000 lots.
