December 14, 2005

 

CBOT Soy Review on Tuesday: Soars into close on spec buying

 

 

Soybean futures on the Chicago Board of Trade ended Tuesday's session posting strong gains, rallying into the close on a healthy dose of speculative buying, traders said.

 

January soybeans finished 13 1/2 cents higher at US$5.97 1/2, January soymeal settled US$6.00 higher at US$194.00 a short tonne, while January soyoil ended 3 points higher at 21.05 cents a pound.

 

The ability of the market to hold Monday's lows coupled with some general bullishness in commodities markets as a whole attracted speculative fund buying, as the trade evens positions ahead of the end of the year, said Anne Frick, senior oilseed analyst with Prudential Financial in New York.

 

The speculative presence in the market has added a new component to futures, with fresh buying enabling prices to rally in the face of projected ending inventories at 19-year highs, traders said.

 

Commodity fund buying was the dominant feature in the market, with the late spike ignited by soymeal staging a late surge after active contracts eclipsed upside resistance levels.

 

The ability of futures to rally in the face of large supplies indicates that bearishness has been largely discounted in the market, said Frick.

 

The only constructive fundamental news was concerns over dryness in Argentina, but it's too early to get excited about that, she added.

 

Despite the gains, active contracts traded inside Monday's trading range, with traders looking for the January contract to hold above the US$6.00-per-bushel level before throwing in the towel on bearish outlooks.

 

Nevertheless, technical chart patterns are turning positive, and with traders on guard for an influx of speculative index fund money to filter into the market, shorts have become nervous, said a CBOT commission house broker.

 

In pit trades, Refco, ABN Amro, Citigroup, RJ O'Brien and DT Trading were featured buyers, with sellers scattered among various firms.

 

South American soybean futures ended higher across the board. The March futures finished 14 cents higher at US$6.44.

 

 

SOY PRODUCTS

 

Soymeal futures soared Tuesday, maintaining a leadership role in the complex. Speculative fund buying buoyed prices once again, propelling the active January future to its highest level since August. Technically motivated buying was a featured attraction, with advances accelerating down the stretch after buy stops were activated once January prices eclipsed resistance at its 200-day moving. It was speculative rally, as the fundamental picture has not changed, traders said.

 

Soyoil futures ended marginally higher, managing to advance on borrowed strength from soybeans. However, the market lost oil share by default, as the strength of soymeal limits upside potential. Soymeal/soyoil spreading was a key ingredient, with the market not receiving the speculative boost that beans and meal received, traders said.

 

January oil share fell to 35.17%, and the January crush was at 71 1/4 cents.

 

In soymeal trades, Calyon Financial, Man Financial, Fimat, Prudential Financial and Refco were key buyers, while Fimat, O'Connor and Tenco were sellers.

 

In soyoil trades, buying and selling was scattered among various trading firms, with commercial buying from ADM Investor Services, Bunge Chicago, Cargill and Term Commodities featured buyers.