December 5, 2007

 

CBOT Soy Review on Tuesday: Up; speculative buys, underlying fundamentals

 

 

Chicago Board of Trade soybean futures ended Tuesday's session higher, rallying to double- digit gains on speculative-led buying, with bullish underlying fundamentals remaining a supportive undercurrent.

 

January soybeans settled 12 3/4 cents higher at US$10.91 1/2 and March soybeans ended 12 cents higher at US$11.09 1/2. January soymeal settled US$5.50 higher at US$298.30 per short tonne. January soyoil finished 13 points higher at 45.93 cents per pound.

 

The market continues to maintain a bullish trend, with weather concerns for South American crops, underlying demand and technical strength related to the market's ability to hold nearby support keeping sellers on the run, analysts said.

 

Spillover support from metal markets coupled with weakness in the U.S. dollar provided additional support to lift futures to the upside, analysts added.

 

Concerns surrounding the threat of a La Nina scenario producing drier conditions in the key pod-filling stages of development for Brazilian and Argentina soybean crops are providing longer-term fundamental support, analysts added.

 

Forecasts for southern Brazil and northern Argentina are a little drier Tuesday, and with demand remaining strong the market continues to focus on the potential for tightening supplies, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

Otherwise, activity was relatively quiet with traders awaiting fresh news to help generate price direction.

 

The DTN Meteorlogix weather forecast said thundershowers and cooler temperatures are expected to boost crops in the northern and eastern regions of Argentina on Wednesday and Thursday. Friday and Saturday will be drier, with only a few light showers expected.

 

In Brazil, scattered showers will bring up to an inch and a half of rain in the central soybean states of Parana, Mato Grosso and Mato Grosso do Sul through Thursday, while the southern state of Rio Grande do Sul will get up to three-quarters of an inch. Going into the weekend, the central region will likely see additional light showers, Meteorlogix said.

 

In pit trades, ADM Investor Services and JP Morgan each bought 300 January, with Fimat a seller of 1,000 January and Rosenthal a seller of 300 January. Speculative fund buying was estimated at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, with soymeal leading the gains on spreads. Soymeal futures climbed on technically based speculative buying and the unwinding of oil/meal spreads, analysts said. The market remains buoyed by underlying demand and spillover support from a bounce in soybeans, analysts added.

 

Soyoil futures ended modestly higher, managing to recover from earlier declines on borrowed strength from soybeans. Spillover weakness from crude oil futures kept prices on the defensive for most of the day, but technical strength and bullish talk surrounding demand potential from a possible variation of a new energy bill kept supportive optimism in the market, analysts said.

 

January oil share ended at 43.50% and the January crush ended at 70 cents.

 

In soymeal trades, JP Morgan bought 600 March and Fimat sold 300 January. Speculative fund buying was estimated at 2,000 lots.

 

In soyoil trades, Bunge Chicago, JP Morgan and Fimat each bought 400 January, and Citigroup bought 300 January. ADM Investor Services sold 700 January, and Bunge Chicago sold 400 January. Speculative fund buying was estimated at 2,000 lots.