December 12, 2006

 

CBOT Soy Review on Monday: Up; bounced higher on technical buys

 

 

Chicago Board of Trade soybean futures ended higher Monday, scoring a technical bounce from last week's consolidative setback.

 

January soybeans finished 10 3/4 cents higher at US$6.66 3/4, and March soybeans ended 10 1/2 cents higher at US$6.82 3/4. January soymeal settled US$2.20 higher at US$190.30 per short tonne, while January soyoil ended 40 points higher at 29.03 cents a pound.

 

The absence of any overtly bearish news, no significant selling pressure, and spillover price strength from corn and soymeal served as catalysts for soybeans to climb, said John Kleist, senior analyst with Top Third Ag Marketing in Chicago.

 

Technically inspired buying was a featured attraction, as the U.S. Department of Agriculture's supply and demand report was perceived as neutral to the market, allowing prices to draw strength from futures' inability to attract selling at the low end of the market's current trading range, Kleist added.

 

The USDA's reports were largely on the neutral side, with an increase in world carryout and increased Argentine production forecasts expected by the market, traders said. Futures followed the higher overnight theme initially, but quickly turned lower on consolidative sales, as the market lacked fresh news to entice speculative buyers into pushing prices, traders added.

 

However, as the day unfolded technical strength provided the spark to pull buyers off the sidelines in otherwise subdued trade, a floor source said.

 

Meanwhile, the DTN Meteorlogix weather forecast said southern Brazil's Rio Grande do Sul province is getting attention for a developing pattern of dry and hot weather. Forecast charts call for mostly dry weather through the middle of next week, along with continued above-normal temperatures. Upper-air high pressure is indicated in southern Brazil. Farther north, Mato Grosso province is having continued favorable weather, with periodic showers and mild temperatures, Meteorlogix reports.

 

In Argentina, a pattern of scattered rain showers remains in Argentina's forecast, but a dry weather trend similar to southern Brazil is possible during the next 10 days, and could become a concern if this indeed develops, Meteorlogix said.

 

In pit trades, Fortis bought 1,000 July; RJ O'Brien bought 800 January; Calyon Financial bought 500 January; and UBS Securities bought 300 January. JP Morgan sold 400 January, with FC Stonnee, Term Commodities, and Calyon Financial each modest sellers on the day.

 

Day session volume on the e-CBOT platform totaled 53,438 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended higher in step with soybeans, managing to recover from initial weaknesses. Soymeal futures scored one-week highs, garnering strength from lower world ending stock forecasts and technical momentum emerging from the nearby contract's ability to hold meaningful support at the January futures' 45- and 50-day moving averages, Kleist said.

 

Soyoil futures ended higher, trading an outside higher day on technical charts in the nearby contract. Technically inspired speculative buying underpinned futures, but upside movement was limited by increased, production and ending stock forecasts from the USDA, traders said.

 

January oil share ended at 43.29% and the January crush ended at 72 1/4 cents.

 

In soymeal trades, Tenco bought 500 January and 2,500 May, with speculative fund buying estimated at 1,500 contracts. JP Morgan sold 1,500 January, Tenco sold 1,000 March, Citigroup sold 300 March and Fimat sold 300 May.

 

In soyoil trades, Citigroup and JP Morgan each bought 400 January, Bunge Chicago bought 200 January, and Fimat bought 200 March. Fortis sold 500 January, Fimat sold 300 January, and RJ O'Brien sold 200 March. Speculative funds were net buyers on the day.