November 25, 2006

 

CBOT Soy Review on Friday: Carves out new highs on speculative buying

 

 

Chicago Board of Trade soybean futures ended higher Friday, carving out new contract highs on speculative buying amid the absence of bearish features to attract fresh selling, analysts said.

 

January soybeans finished 10 1/4 cents higher at US$6.84 1/4, and March soybeans ended 10 cents higher at US$6.96 3/4. January soymeal settled US$2.70 higher at US$196.60 per short tonne, while January soyoil ended 2 points higher at 29.30 cents a pound.

 

The lack of negative inputs to start the session coupled with bit and pieces of bullish news magnified the market's advances in the thinly traded abbreviated session, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

CBOT agricultural markets closed at 12:00 p.m. CST Friday.

 

Seasonal trends, supportive export sales data and spillover from neighboring grain futures energized the upside move, analyst say. The absence of any significant selling pressure eased the market's ascent, with underlying technical momentum keeping a level of strength in the market as well, traders added.

 

Soybeans finally satisfied a near term objective of setting new highs, with demand remaining strong in the face higher prices and the unwinding of crush spreads providing a boost to keep sellers sidelined, Kleist added.

 

The upward tone was consistent from mid-session on, but light profit taking pressure did emerge to cap advances as traders remained leery of the potential for a correction on Monday, a floor source said.

 

The DTN Meteorlogix weather forecast said Brazil's southern soybean-producing states of Rio Grande do Sul and Parana are hot, in the 80s and 90s, and have been dry, but on Monday are expected to see some scattered rainfall, up to an inch and a half in places. Mato Grosso, the top soybean producer, is also very hot and mostly dry. The south should see some relief from those conditions with scattered showers and thundershowers Monday and Tuesday, but precipitation to the north will be lighter, Meteorlogix reported.

 

In pit trades, speculative fund buying was estimated at 2,000 contracts. Goldenberg Hehmeyer bought 500 January, UBS Securities bought 400 January, and Citigroup and Man Financial each bought 300 January.

 

Day session volume on the e-CBOT platform was 15,483 contracts.

 

 

Soy Products

  

Soy product futures ended higher, with soymeal the upside leader. Soymeal rallied to two-week highs, driven by speculative buying and the unwinding of oil/meal spreads, traders said. Strong weekly export sales showing commitments nearly double week ago levels set the stage for the market's bounce, analysts said.

 

Soyoil futures were the weakest link in the complex, but still managed to produce marginal gains. Underlying support from bullish long range demand prospects for world vegoils continued to provide strength to keep selling limited, analysts said. After setting new contract highs Wednesday, light profit taking encouraged some unwinding of product spreads, traders added.

 

January oil share ended at 42.70% and the January crush ended at 70 1/2 cents.

 

In soymeal trades, Fortis bought 800 January and Rand Financial bought 300 March. Speculative fund buying was estimated at 1,500 contracts.

 

In soyoil trades, buyers and sellers were widely scattered among various commission houses, with Fimat a featured seller of 600 January. Speculative funds were estimated net buyers on the day.