December 13, 2007

 

CBOT Soy Review on Wednesday: Up; extends streak of new contract highs

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, continuing its streak of setting new contract highs on speculative led buying.

 

January soybeans settled 16 cents higher at US$11.51 1/2 and March soybeans ended 16 1/4 cents higher at US$11.70 3/4. January soymeal settled US$4.30 higher at US$322.50 per short tonne. January soyoil finished 77 points higher at 46.69 cents per pound.

 

The combination of bullish underlying demand, crop uncertainties in South America and technical momentum provided a supportive theme to keep speculative buyers in control of direction, analysts said.

 

Market bears have little cover for their positions, particularly with South American weather issues, said a CBOT floor analyst.

 

Sellers are seemingly content to sit on the sidelines, with hedge pressure non eventful and perceptions that speculative funds will continue to add length in the market clearing the path for futures to probe new highs, analysts added.

 

Meanwhile, reports that a prominent investment firm forecast long range soybean prices above US$14.00 a bushel and news world central banks were adding liquidity to world financial markets provided a another boost to attract speculative fund buying, traders say.

 

The Bank of Canada, the Bank of England, the European Central Bank, the U.S. Federal Reserve and the Swiss National Bank all announced measures designed to address elevated pressures in short-term funding markets.

 

Active nearby contracts are at their highest levels since July 1973, with a tightening balance sheet amid strong domestic and export demand outlooks supporting prices, analysts said.

 

The DTN Meteorlogix weather forecast said soybeans in the Brazilian states of Parana and Mato Grosso do Sul got a slight reprieve from hot and dry conditions with some isolated thunderstorms. Temperatures will decline Wednesday and Thursday, will go up again Saturday and back down again Sunday and Monday, Meteorlogix reports.

 

Soybeans in Argentina are benefiting from cooler conditions and some rainfall, but the precipitation will be minimal. Conditions into next week will be hot with below-normal rainfall, Meteorlogix forecasts.

 

On tap for Thursday, U.S. Department of Agriculture is scheduled to release weekly export sales figures for the week ended Dec. 6 at 8:30 a.m. EST. Trade estimates put soybean export sales at 600,000 to 850,000 metric tonnes. Soymeal sales are projected in a range of 75,000 to 175,000 metric tonnes, with soyoil sales expected in a range from 10,000 to 25,000 tonnes.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 6,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures spiked higher, with soymeal setting new contract highs and soyoil propelling to 2-week highs. Speculative led buying was consistent in both markets, with strong demand and end users caught short in soymeal keeping sellers on the sidelines, analysts said.

 

Soyoil futures catapulted higher, bouncing back from its consolidative mode on broad based speculative buying in commodities and borrowed strength from a US$4.00 a barrel rise in crude oil futures, analysts said.

 

January oil share ended at 41.9% and the January crush ended at 70 cents.

 

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

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with Bunge Chicago buying 900 January, Fimat buying 600 May. Speculative fund buying was estimated at 2,000 lots and commercial buying was estimated at 2,000 lots.