December 20, 2006

 

CBOT Soy Review on Tuesday: Up; bounce from prior lows,technical buys

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, bouncing back from Monday's slide to 6-week lows on light technical buying.

 

January soybeans finished 5 1/2 cents higher at US$6.53 1/2, and March soybeans ended 5 3/4 cents higher at US$6.68 3/4. January soymeal settled US$0.60 higher at US$185.50 per short tonne, while January soyoil ended 29 points higher at 28.00 cents a pound.

 

The market was overdue for a recovery, and with the absence of speculative selling pressure, futures found it easy to sustain a higher tonnee throughout the day, said a CBOT commission house broker.

 

The ability of nearby futures to climb back above major moving average resistance at the 50-day moving averages, provided a technical spark to encourage upside movement, traders added.

 

Overall activity was relatively quiet over the course of the day, as futures settle into their holiday trading mode in the absence of fresh fundamental influences. Nevertheless, traders say the upward move was aided by confirmation of rumored Chinese buying and a weaker U.S. dollar, while bearish South American crop conditions apply pressure to limit upside momentum, traders added.

 

The U.S. Department of Agriculture said Tuesday that private exporters reported the sale of 110,000 metric tonnes of soybeans to China for delivery in the 2006/2007 marketing year.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said rain of up to 1 1/2 inches is headed for southern Brazil's Rio Grande do Sul through Thursday, while the Parana province receives one-half inch of rain. Additional rainfall is likely during the end of the week as well. Mato Grosso had rains of up to 1 1/2 inches on Monday. Additional showers are headed for this province also, Meteorlogix reports.

 

In Argentina, thundershowers with up to 1 1/2 inches of rain are in store Wednesday, following up on widespread rains last week, Meteorlogix added.

 

In pit trades, Fimat bought 300 March, JP Morgan and RJ O'Brien each bought 200 March and Fortis bought 200 January. Sellers were lightly scattered among various commission houses. Speculative funds were net buyers on the day.

 

Day session volume on the e-CBOT platform was 39,524 contracts.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, recovering from prior declines on speculative led buying. Soyoil futures were the upside leader of the products, buoyed by technically inspired buying and strength in outside energy markets, traders said. The market staged a modest recovery from multi-week lows, energized by nearby contracts' ability to climb above their 50-day moving averages, traders added.

 

Soymeal futures ended the session posting modest gains, rebounding from early mixed price action on borrowed strength from soybeans. Futures were the weakest link in the complex, as light soyoil/soymeal spreading capped upside movement, analyst said.

 

January oil share ended at 43.01% and the January crush ended at 62 1/2 cents.

 

In soymeal trades, Man Financial and First Futures each bought 200 January, Shatkin/Arbor and USA each bought 300 January. Fimat sold 300 January, Bunge Chicago sold 200 August and 200 September, and Man Financial sold 200 March. Speculative fund buying was estimated at 1,000 contracts.

 

In soyoil trades, Tenco bought 800 March, Prudential Financial bought 300 January, Citigroup and UBS Securities each bought 300 May, and Bunge Chicago bought 300 March. Fimat sold 600 March, UBS Securities sold 400 July, Citigroup and RJ O'Brien each sold 300 March. Speculative funds were estimated net buyers of 2,000 contracts.