December 1, 2005

 

CBOT Soy Review on Wednesday: Ends up on month-end positioning

 

 

Soybean futures on the Chicago Board of Trade ended moderately higher Wednesday, rebounding from Tuesday's setback on end-of-month positioning, traders said.

 

January soybeans finished 4 cents higher at US$5.58, January soymeal settled US$1.30 higher at US$172.10 a short tonne, and January soyoil ended 12 points higher at 21.29 cents a pound.

 

Month-end short covering fueled the day's gains, but the market continued to consolidate in a range with January futures continuing its string of settling either up 4 cents or down 4 cents, said a CBOT Commission house broker.

 

Futures had become oversold and displayed signs of downside exhaustion, said a CBOT trader. Rumors of Chinese buying interest and buying from Taiwan provided light strength.

 

The supportive theme was consistent throughout the day, except for a brief retracement into negative territory, with commission house selling emerging after futures encountered a lack of follow-through buying above technical resistance.

 

Futures managed to satisfy a near-term technical objective of filling a chart gap left from Friday basis the January future, but without fresh fundamental support, favorable South American crop conditions and lagging export demand, upside potential was limited, analysts said.

 

Nevertheless, despite a higher finish, the inability of the market to settle above resistance at US$5.59 basis the January contract, bearish momentum remains intact, a technical trader added.

 

DTN Meteorlogix Weather Service said in Brazil, Mato Grosso had rainfall on Tuesday and more rain is on the way in this big soybean-producing state during the next five-days. Parana and Rio Grande do Sul also have rains of one-quarter to one inch headed for their soybean areas through Friday, with an additional one-quarter to one inch rainfall in store this coming weekend. Argentina has near- to above-normal rainfall in its central corn and soybean belt outlook during the next 10 days, Meteorlogix said.

 

Meanwhile, analysts surveyed by Dow Jones Newswires anticipate weekly soybean export sales for the week ended Nov. 24 to fall within a range of 400,000 to 600,000 metric tonnes. USDA is scheduled to release its weekly sales report Thursday at 8:30 a.m. EST.

 

In pit trades, ADM Investor Services, Calyon Financial and Fimat were featured buyers. ADM Investor Services, Calyon Financial, Goldenberg Hehmeyer and Man Financial were key sellers.

 

South American soybean futures ended higher. The March futures settled 3 1/2 cents higher at US$5.97.

 

 

Soy Products

 

Soymeal futures ended higher across the board, buoyed by end-of-month speculative buying with the lack of delivery notices posted against the nearby contract providing underlying support, traders said.

 

Soyoil futures ended a two-sided session higher, recovering from early weakness on late soyoil/soymeal position evening. Underlying commercial buying supported prices while speculative selling attributed to the correction in oil share and large deliveries against the December contract applied pressure.

 

January oil share finished at 38.22%, and the January crush was at 54 3/4 cents.

 

A total of 1,978 delivery notices were posted against the December soyoil contract, with the house account at ADM Investor Services issuing all 1,978 lots. Stoppers were scattered among various firms. The delivery receipts were for inventories located in Ackley, Iowa. The last date assigned was Nov. 28.

 

Analysts anticipate soymeal commitments in a range of 125,000 to 175,000 tonnes in Thursday's export sales report, with soyoil sales seen in a range of 4,000 to 9,000 tonnes.

 

In soymeal trades, Bunge Chicago bought 400 March and 400 May, ABN Amro and O'Connor each bought 600 January, Man Financial bought 400 January. Cargill sold 600 January, O'Connor sold 500 January and Rand Financial sold 300 January. Commodity fund buying was estimated at 1,000 lots.

 

In soyoil trades, ADM Investor Services bought 200 January, Bunge Chicago bought 400 January, Cargill bought 400 December and 200 January, Citigroup, Man Financial and Rand Financial each bought 300 January, and Prudential Financial bought 300 December. ADM Investor Services sold 300 January, and Calyon Financial sold 1,200 January.