December 11, 2007
 
CBOT Soy Review on Monday: Up; carves out new contract highs

 

 

Chicago Board of Trade soybean futures ended higher Monday, carving out new contract highs once again on a combination of technical buying and solid underlying fundamentals, analysts said.

 

January soybeans settled 6 cents higher at US$11.25 3/4 and March soybeans ended 5 1/2 cents higher at US$11.44 1/4. January soymeal settled US$1.20 higher at US$313.90 per short tonne. January soyoil finished 6 points higher at 45.76 cents per pound.

 

The market carved out its highs in early action, feeding off Friday's strong technical gains, dryness concerns for parts of South American growing areas and a good underlying demand base, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

Spillover support from wheat futures, initial strength in outside markets and outlooks for a tighter U.S. balance sheet in Tuesday's supply and demand report helped maintain the bullish trend, analysts added.

 

However, futures settled into a consolidation mode after the initial gains were secured, and commercial hedging and position evening ahead of Tuesday's reports exhausted buying interest, traders said.

 

Futures were seemingly spinning their wheels through midday, with traders looking for fresh news amid ideas the market's supportive factors were adequately factored into prices, traders added. This continued until late short covering attracted light buying to lift prices near session highs down the stretch, a CBOT broker said.

 

The DTN Meteorlogix weather forecast said the weather patterns bear watching in Brazil's Rio Grande do Sul, due to a high correlation between La Nina Pacific conditions and an increased risk of significant dryness during the growing season. Rio Grande do Sul is Brazil's third-largest soybean-producing province. Brazil's top two soybean-growing provinces, Mato Grosso and Parana, have a more favorable weather trend. Central and northern Brazil soybean areas will have generally favorable moisture conditions for the developing crop during the next seven to 10 days.

 

A drier weather pattern is forming over Argentina's central corn and soybean belts. Some rain is expected on Monday but will likely not be enough to end concerns over developing dryness, Meteorlogix said.

 

The U.S. Department of Agriculture is scheduled to be release its December supply and demand projections Tuesday at 8:30 a.m. EST. The average of analysts' estimates peg 2007-08 U.S. soybean ending stocks at 197 million bushels, down 13 million from November's forecast. The estimates ranged between 144 million and 210 million bushels.

 

In pit trades, buyers and sellers were scattered among various commission houses, with UBS Securities buying 600 January, and Bunge Chicago selling 400 January. Speculative fund buying was estimated at 2,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, with soymeal taking a leadership role once again. Soymeal futures jumped to new contract highs, buoyed by bullish technical momentum and a solid underlying demand base, analysts said.

 

Soyoil futures ended modestly higher, feeding off the supportive tonnee filtering through the complex. Nevertheless, the market continued to lose product share to soymeal on spreads, with weakness in crude oil futures applying light pressure, analysts added.

 

January oil share ended at 42.16% and the January crush ended at 68 1/4 cents.

 

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

 

In soyoil trades, Tenco bought 600 July, and ADM Investor Services sold 1,000 January and 500 March.

Speculative fund buying was estimated at 2,000 lots.