December 22, 2007

 

CBOT Soy Review on Friday: Rallies; new highs on fundamentals, technicals 

 

 

Chicago Board of Trade soybean futures rallied Friday, setting new contract highs as supportive underlying fundamentals and technical strength kept bullish traders enthused, analysts said.

 

January soybeans settled 16 3/4 cents higher at US$11.77 1/2 and March soybeans ended 16 1/4 cents higher at US$11.96. January soymeal settled US$3.10 higher at US$328.20 per short tonne. January soyoil finished 52 points higher at 47.15 cents per pound.

 

The combination of bullish underlying fundamentals and traders looking to buy the market ahead of an expected influx of fresh index fund capital to be invested in agricultural commodities in January sparked the rally, said John Kleist, analyst with Kleist Ag Consulting.

 

The absence of any significant selling helped extend the gains, as sellers remain unwilling to stand in front of the bullish trend, particularly with any bearish news to derail the bullish train, analysts added.

 

Overall activity was subdued despite the double-digit gains, with some traders evening out positions ahead of an extended break during the holidays, a CBOT floor broker said.

 

DTN Meteorlogix said that in Argentina, and extending into southern Brazil, forecast maps during the end of December feature an upper-atmosphere low pressure area just west of the northern Chile coast. Upper-air high pressure shows up from east-central and northeast Brazil into the Atlantic, but doesn't appear to be a dominant high. This pattern promises to be wet in northern Argentina, Paraguay, and western and southern Brazil, Meteorlogix said.

 

This pattern also is indicating an improved outlook for rainfall in Argentina's central crop belt to finish 2007. If the rain indeed develops, it will be very beneficial to pollinating corn and flowering soybeans in central Argentina, Meteorlogix added.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated between 3,000 and 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, with soyoil soaring to new contract highs.

 

Soyoil futures spiked higher, setting new highs as bullish long-range demand fundamentals and a strong speculative buying force that is in and underneath the market keeps buyers enthused, said Kleist.

 

Soymeal futures rallied as well, bouncing up against contract highs on underlying demand and bullish technical momentum, analysts said. However, oil/meal spreading managed to cap upside potential, traders added.

 

January oil share ended at 41.80% and the January crush ended at 63 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.

 

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