December 20, 2005

 

CBOT Soy Review on Monday: Rallies to 3-month highs on spec buying

 

 

Soybean futures on the Chicago Board of Trade ended Monday's session posting strong gains, as speculative fund buying propelled the most-active March future to its highest level in three months.

 

March soybeans finished 18 cents higher at US$6.20 1/2, March soymeal settled US$7.50 higher at US$199.20 a short tonne, and March soyoil ended 35 points higher at 21.91 cent a pound.

 

Technically inspired buying was the feature of the day, with late buying from Fimat and Citigroup providing a spark to ignite a late surge in prices, floor sources said.

 

The ability of the market to chip away at overhead technical resistance at last week's highs uncovered pre-placed buy orders, with sellers running for cover.

 

Strength in outside inflationary metals markets attracted speculative buyers, with traders saying participants remain hesitant sellers amid indications futures have discounted bearish fundamentals. Ideas that commodity index fund buying is poised to enter the market in early January amid the attractiveness of commodities as an alternative investment is seen limiting the willingness of traders to take on short positions in the face of bearish fundamentals.

 

Lingering concerns over dryness in Argentine growing areas generated light support to entice the trade into adding some South American risk premium. However, analyst say it's still relatively early to discount southern- hemisphere production potential.

 

Meanwhile, DTN Meteorlogix Weather Service said where farmers are still planting in Argentina, isolated rains are projected in the next couple days to cover only about half of the main agricultural areas in the south of the country. The next chance of rain is forecast for the middle of next week, and temperatures are expected to remain in the 80s and 90s.

 

The U.S. Department of Agriculture said soybeans inspected for export in the week ended Dec. 15 totaled 20.418 million bushels. Analysts expected soybean inspections in a range of 22 million to 27 million bushels.

 

In other news, the Buenos Aires Cereals Exchange reported Monday that nearly 80% of Argentina's 2005-06 soybean crop was planted as of Saturday. The condition of the crops (in the main soybean production area) is good, though rain is needed to add moisture to recently planted crops and to help farmers finish the planting that still needs to be done, the Exchange said.

 

In pit trades, ABN Amro, RIS division of Man Financial, Refco and Goldenberg Hehmeyer each bought 500 March, and Fimat and Citigroup each bought 1,000 March. Commodity fund buying was estimated at 5,000 contracts.

 

South American soybean futures ended the day posting double-digit gains. The March futures finished 14 1/2 cents higher at US$6.47.

 

 

SOY PRODUCTS

 

Soymeal futures ended with strong gains, with the most-active March futures climbing to four-month highs. Speculative fund buying was the key driver of the advances, with talk of reduced bird flu outbreaks in China increasing soymeal feed demand, serving as the the fundamental catalyst to extend the gains.

 

Soyoil futures rallied in unison with the rest of the complex but continued to lose oil-share percentage to soymeal, as the market consolidated within Friday's trading range.

 

March oil share ended at 35.48%, and the March crush was at 58 3/4 cents.

 

In soymeal trades, buyers were scattered among various commission houses, with Fimat and Tenco featured buyers. Fund buying was estimates at 4,500 lots.

 

In soyoil trades, buyers were scattered among various commercial and commission houses, with Calyon Financial, Fimat and ADM Investor Services key buyers. Selling was spread across various firms.