November 29, 2005

 

CBOT Soy Review on Monday: Ends up on late short covering

 

 

Soybean futures on the Chicago Board of Trade ended moderately higher Monday, managing to reverse early declines on a late short- covering bounce after selling pressures were exhausted, traders said. January soybeans finished 4 cents higher at US$5.58 1/4, January soymeal settled US$1.00 higher at US$171.70 a short tonne, and January soyoil ended 18 points higher at 21.46 cent a pound.

 

The inability of futures to extend initial losses coupled with technically oversold conditions set the stage for the price bounce, said a CBOT commission house broker.

 

Follow-through selling from Friday, bird flu concerns in Asia and favorable crop conditions for South American crops provided the means for the initial slide to nine-month lows, as prices gapped lower for a third consecutive trading day on the open.

 

A lagging export pace added to the downward pressure, but without any follow-through selling at the lows and short-term oversold conditions, buyers emerged to reverse the declines. The influx of buying caught speculative and local traders leaning the wrong way, forcing participants to cover short positions down the stretch.

 

Technical buying added to the gains, with advances accelerating as prices crept into a chart gap left from Friday basis the January contract. Nevertheless, analysts say the market still has a bearish outlook, as sustainable rallies will be tough to come by without strong export consumption.

 

Meanwhile, the U.S. Department of Agriculture said private exporters reported the sale of 116,000 metric tonnes of U.S. soybeans to China for delivery in the 2005-06 marketing year.

 

The USDA said soybeans inspected for export in the week ended Nov. 24 totaled 21.806 million bushels. Analysts expected soybean inspections in a range of 23 million to 28 million bushels. Accumulated soybean export inspections for the 2005-06 marketing year total 280.772 million bushels, down from last year's 364.723 million at the same time.

 

The DTN Meteorlogix weather forecasts said very few crop weather problems are apparent in either Brazil or Argentina. Brazil's entire soybean belt has periodic showers and thunderstorms in store during at least part of this week. Argentina's weather pattern has been near ideal this season, and additional showers of up to three-quarters of an inch are on tap through Wednesday. Soybeans in both Brazil and Argentina should have a good week of progress, Meteorlogix added.

 

In pit trades, ADM Investor Services, ABN Amro, Calyon Financial Shatkin/Arbor and UBS Securities were featured buyers. Calyon Financial, Fimat, RJ O'Brien, Refco and DT Trading were key sellers.

 

South American soybean futures ended higher across the board. The March futures settled 7 1/2 cents higher at US$5.96 1/2.

 

 

SOY PRODUCTS

 

Soymeal futures ended up, rallying to session highs late, in step with the recovery in soybeans. Spillover strength from soybeans served as the catalyst for the late gains, with speculative short covering featured. Otherwise, spreading activity ahead of first notice day was the dominant factor in the market.

 

Soyoil futures finished firm, climbing in unison with soybeans. Market rumblings of China looking for soyoil supplies helped lift futures, with technical buying contributing to the gains as well.

 

January oil share finished at 38.46%, and the January crush was at 55 1/2 cents.

 

In soymeal trades, buying was scattered among various firms, while Calyon Financial and Man Financial were featured sellers. ADM Investor Services, Refco and Cargill were active spreaders in the December/January spread.

 

In soyoil trades, Bunge Chicago, Calyon Financial, Man Financial and Tenco were key buyers. ADM Investor Services, Prudential Financial, Rand Financial, Refco and Tenco were featured sellers.