December 6, 2006

 

CBOT Soy Review on Tuesday: Bounces higher; early selling exhausted

 

 

Chicago Board of Trade soybean futures ended Tuesday's session higher, bouncing back from earlier declines after speculative selling pressure was exhausted.

 

January soybeans finished 5 cents higher at US$6.64 1/4, and March soybeans ended 4 1/4 cents higher at US$6.77 3/4. January soymeal settled US$2.10 higher at US$187.80 per short tonne, while January soyoil ended unchanged at 29.34 cents a pound.

 

The market managed to recover from the defensive theme that engulfed futures recently, with longer term bullish technical trends, solid underlying demand, and spillover from higher corn futures attracting buyers, analysts said.

 

Overall activity was fairly subdued, with futures managing to find their footing after early carryover weakness from Monday's corrective slide had run its course, a CBOT floor analyst said.

 

A quiet news front did little to inspire activity, with upside movement emerging in the absence of follow through selling to extend the price correction absorbed in previous sessions, he added.

 

The DTN Meteorlogix weather forecast said South American crop areas continue to receive rainfall and generally favorable temperatures. Southern Brazil will encounter rains of up to one inch by Wednesday; covering most of Parana through Rio Grande do Sul. Mato Grosso in the north continues to receive scattered showers; this pattern continues through the end of the week. Thus far, the rains haven't been heavy enough to put a major halt to fungicide applications for the control of Asian soybean rust, Meteorlogix reports.

 

In Argentina, showers with up to one inch of rain are likely across most of the soybean belt through Wednesday. The general weather pattern for crops in South America is favorable for development, Meteorlogix reports.

 

In pit trades, buyers and sellers were scattered among various commission houses.

 

Day session volume on the e-CBOT platform was 35,443 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended mostly higher, staging a modest recovery from recent declines. Soymeal futures were the upside leader of the products, benefiting from the unwinding of soyoil/soymeal spreads and spillover from a recovery in soybeans, analysts said.

 

Soyoil futures ended narrowly mixed, bouncing back from early declines. The continuation of corrective speculative sales weighed on futures for most of the day, with spreading between the products a feature, traders said. However, once the selling pressure was absorbed and futures found price support, bullish long term demand prospects managed to attract light buying to lift prices near unchanged levels down the stretch, traders added.

 

January oil share ended at 44.13% and the January crush ended at 72 cents.

 

In soymeal trades, buyers and sellers were widely scattered among various firms. Calyon Financial and JP Morgan each bought 300 January, Bunge Chicago bought 200 January and Fimat bought 200 March. Term Commodities sold 300 January.

 

In soyoil trades, activity was scattered among various commission houses, with Rand Financial a buyer of 300 March, ADM Investor Services selling 300 January, and JP Morgan a seller of 300 March.