November 29, 2007

 

CBOT Soy Review on Wednesday: Higher; rebounds on positioning, spillover

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, bouncing back from earlier losses on end-of-the-day positioning and spillover support from soymeal and wheat futures.

 

January soybeans settled 5 3/4 cents higher at US$10.96 3/4 and March soybeans ended 5 3/4 cents higher at US$11.13 1/2. January soymeal settled US$2.90 higher at US$296.60 per short tonne. January soyoil finished 17 points lower at 46.58 cents per pound.

 

The market is following the pattern of recent weeks, consolidating after making new highs, said John Kleist, analyst with Kleist Ag Consulting.

 

Follow-through selling from Tuesday's profit-taking session coupled with a general sell-off in commodities applied price pressure for most of the day, with a firm U.S. dollar and lower crude oil and metal futures laying the ground work for early losses, analysts said.

 

However, the exhaustion of selling, spillover support from limit-up wheat futures and a bounce in soymeal futures pulled soybeans into positive territory down the stretch, analysts added.

 

Meanwhile, futures remain underpinned by demand, as it is yet to be proven that China buying interest has backed off, Kleist added.

 

The U.S. Department of Agriculture reported a rise of up to 4 cents a bushel in spot soybean premiums for immediate deliveries of soybeans to New Orleans-area ports and grain terminals. CIF bids have now risen by 6 cents in only two days, placing basis above the previous three-year average, analysts said.

 

Otherwise, activity was fairly subdued with traders unwilling to aggressive press the market in the face longer term bullish outlooks, analysts said. Technical buying added to the late bounce, with the ability of nearby contracts to climb back above their 10-day moving averages uncovering fresh buying, a CBOT floor trader said.

 

On tap for Thursday, U.S. soybean crush for October is expected to be 162.8 million bushels in the U.S. Census Bureau's monthly report, up from the September crush figure of 147.5 million bushels. The Census Bureau's crush report is scheduled for release Thursday at 8 a.m. EST. October soymeal stocks are seen decreasing to 333,750 short tonnes, down from the 350,300 tonnes reported for September. Soyoil stocks are seen increasing to 3.030 billion pounds in the report, up from 2.912 billion the previous month.

 

USDA is scheduled to release weekly export sales figures for the week ended Nov. 22 at 8:30 a.m. EST. Trade estimates put soybean export sales at 900,000 to 1.3 million metric tonnes. Soymeal sales are projected in a range of 75,000 to 175,000 metric tonnes, with soyoil sales expected in a range from 20,000 to 60,000 tonnes.

 

The DTN Meteorlogix weather forecast said the soybean areas of Argentina are hot and dry, with temps into the mid-90s in the central provinces of Cordoba and Santa Fe. Conditions favor field work, but soil moisture is evaporating. Showers this weekend will boost crops in early development, but the very dry Cordoba region may not get good coverage.

 

In Brazil, the western states of Mato Grosso and Mato Grosso do Sul got some light showers on Tuesday and Tuesday night, while the coastal state of Bahia got thunderstorms. That precipitation will favor young soybeans. In the south, drier weather is favorable for planting and other field work, but rain is expected to develop sometime over the weekend or early next week, Meteorlogix reports.

 

In pit trades, Tenco bought 400 November and Rand Financial bought 300 January. Sellers were scattered among various commission houses.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil futures continuing their retreat in unison with crude oil futures. Soyoil futures ended on the defensive, pressured by a correction in crude oil and overnight weakness in Malaysian palm oil futures, analysts said. The defensive influence of outside markets attracted speculative sales and profit-taking pressure, analysts added.

 

Soymeal futures ended higher, staging a late bounce on meal/oil spreading amid the corrective price action in soyoil futures, analysts said. Otherwise, underlying demand managed to lift futures as well, analysts added.

 

December oil share ended at 44.11% and the December/January crush ended at 53 1/2 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with JP Morgan a buyer of 300 January and a seller of 300 December.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with Iowa Grain buying 400 January and JP Morgan selling 500 January. Speculative fund selling was estimated at 2,000 lots.