December 6, 2007

 

CBOT Soy Review on Wednesday: Beans up; feed off soymeal price strength

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, rallying on the back of soymeal's run to new contract highs, analysts said.

 

January soybeans settled 8 cents higher at US$10.99 1/2 and March soybeans ended 8 cents higher at US$11.17 1/2. January soymeal settled US$5.10 higher at US$303.40 per short tonne. January soyoil finished 23 points lower at 45.70 cents per pound.

 

Spillover support from soymeal emerged as a featured attraction amid an absence of fresh fundamental news to lead prices, analysts added.

 

A quiet news front kept technicals in play, with follow-through buying from Tuesday's firm close providing initial strength, traders said.

 

However, as the day unfolded, meal's run to new highs surfaced as a dominant feature, with lingering worries surrounding dryness issues in Argentina an underpinning theme as well, said Mario Balletto, analyst with Citigroup Global Markets Inc. in Chicago.

 

Otherwise, overall activity was subdued, but bullish longer range fundamentals continue to attract speculative buyers while keeping sellers sidelined, traders said.

 

The DTN Meteorlogix weather forecast said Wednesday's long-range charts suggest that southern Brazil through Argentina will stay dry through the balance of the 10-day period with temperatures averaging mostly above normal. Northern Brazil soybean areas have generally favorable crop weather conditions at this time.

 

In other news, private analytical firm Informa Economics estimated 2007-08 Brazilian soybean production at 62.7 million metric tonnes and Argentina's 2007-08 soybean production at 46.3 million tonnes, traders said Wednesday. In November, the U.S. Department of Agriculture estimated Brazil's 2007-08 soybean crop at 62.0 million metric tonnes and Argentina's 2007-08 soybean production at 47.0 million.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release weekly export sales figures for the week ended Nov. 29 at 8:30 a.m. EST. Trade estimates put soybean export sales at 600,000 to 800,000 metric tonnes. Soymeal sales are projected in a range of 125,000 to 150,000 metric tonnes, with soyoil sales expected in a range from 10,000 to 20,000 tonnes.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal soaring to new contract highs. Technically inspired buying was a feature in meal, with a break out from a recent chart channel uncovering pre-placed buy orders, analysts say. The move was significant from a technical standpoint, with meal/oil spreading and underlying demand from increased feedings due to colder temperatures in the central U.S. providing support to lift prices to new highs, said Balletto. Nearby meal contracts rallied to their highest levels since July 2004.

 

Soyoil futures ended lower, succumbing to meal/oil spreading, traders say. Soyoil is showing some upside exhaustion, promoting consolidative activity following last week's run to new highs, analysts added.

 

January oil share ended at 42.96% and the January crush ended at 70 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered across various commission houses, with Fimat a buyer of 2,000 January and 500 March. Speculative fund buying was estimated at 4,000 lots.

 

In soyoil trades, JP Morgan, Citigroup, and Prudential Financial each bought 400 January. ADM Investor Services sold 600 March, Bunge Chicago sold 800 January, and Tenco sold 400 January and 500 March. Commercial selling was estimated between 1,000 and 2,000 lots.