December 9, 2005

 

CBOT Soy Review on Thursday: Climbs on spec buying, soymeal strength

 

 

Soybean futures on the Chicago Board of Trade ended higher across the board Thursday, buoyed by speculative fund buying and spillover momentum from a late bounce in soymeal as participants positioned themselves ahead of Friday's supply and demand report.

 

January soybeans finished 7 3/4 cents higher at US$5.66 3/4, January soymeal settled US$6.00 higher at US$179.30 a short tonne, and January soyoil ended 3 points higher at 21.22 cents a pound.

 

The market encountered a short-covering bounce, with fundamental support from firm cash prices and strong weekly export sales for soybeans and soymeal sparking the price spike, said a CBOT commission house broker.

 

Futures had effectively absorbed the bearish inputs of rising ending stock estimates and a lagging export pace, opening the door for a price bounce after absorbing weakness in the past two trading days.

 

The supportive theme was consistent from the outset, with futures quietly bouncing back from prior declines. The export sales report helped ignite the recovery, with spillover momentum from active fund buying in soymeal and higher inflationary markets propelling futures to new session highs down the stretch.

 

Otherwise, the rolling of nearby positions was a featured attraction, with bearish underlying fundamentals remaining a hindrance to any prolonged rally, traders said.

 

Ahead of the open, U.S. Department of Agriculture said 2005-06 marketing- year sales totaled 952,100 tonnes in the week ended Dec. 1. The primary buyer was China at 523,000 tonnes. 2006-07 sales totaled 120,000 tonnes. Pre-report estimates ranged from 400,000 to 600,000 tonnes. Soymeal sales were 272,400 tonnes, well above estimates that ranged from 75,000 to 125,000 tonnes.

 

USDA is scheduled to release its latest carryout projections in its supply and demand report Friday at 8:30 a.m. EST. The average of estimates from analysts surveyed by Dow Jones Newswires pegs the 2005-06 U.S. soybean carryout at 386 million bushels, from a range of 337 million to 450 million.

 

In pit trades, Calyon Financial, Man Financial, RJ O'Brien, Rosenthal, Fimat and O'Connor were featured buyers. Commodity fund buying was estimated at 4,000 lots.

 

South American soybean futures ended on firm footing. The March futures settled 9 cents higher at US$6.07 1/2.

 

 

Soy Products

 

Soymeal futures ended strongly, rallying into the close on a healthy dose of speculative fund buying. Active contracts soared to three-week highs, climbing firmly above meaningful technical-resistance levels. Supportive weekly export sales reported for the prior week helped kick-start the firm tonnee. Speculative fund buying was a key ingredient, with solid domestic demand serving as an underpinning feature as well.

 

Soyoil futures ended mixed, with most months lower, pressured by soymeal/soyoil spreading. Ample nearby supplies amid strong yields remain bearish influences to keep futures on the defensive, traders said. However, larger-than-expected weekly export sales and borrowed strength from soybeans managed to limit downside pressure. January oil share finished at 37.18%, and the January crush was at 61 1/4 cents.

 

In soymeal trades, Calyon Financial, Rand Financial and Man Financial were noted buyers, particularly down the stretch.

 

In soyoil trades, buyers and sellers were scattered among various trading firms.