December 27, 2006

 

CBOT Soy Review on Tuesday: Bolts higher on technical-inspired buying

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, picking up where they left off ahead of the Christmas holiday weekend on technically inspired speculative buying.

 

January soybeans finished 12 cents higher at US$6.71 1/2, and March soybeans ended 12 1/4 cents higher at US$6.86 1/2. March soymeal settled US$3.20 higher at US$194.10 per short tonne, while March soyoil ended 48 points higher at 29.32 cents a pound.

 

The combination of technical strength, spillover support from soyoil and ideas the market needed to move back in line with corn after recent gains in that market encouraged speculative funds to reload long positions, said John Kleist, senior analyst with Top Third Ag Marketing.

 

Follow-through buying from Friday's firm technical close, coupled with price strength in Asian markets, kick-started the gains initially, a floor analyst said. The theme was consistent with the ability of active contracts to gap above major moving averages on technical charts uncovered pre-placed buy stops to propel futures to double-digit gains, Kleist added.

 

However, overall activity thinned after the initial price surge was exhausted, with futures settling into narrow ranges in quiet holiday trade, floor sources said.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said in South America, southern Brazil had rainfall of up to three inches during the holiday weekend, and Argentina's central crop belt had rainfall of up to two inches. These rains continue the pattern of favorable weather in the variable climate areas of South America's crop regions.

 

This week will bring some hotter and drier weather to South America, with temperatures encroaching on the 100-degree Fahrenheit mark; however, the recent rains will give enough soil moisture to help crops avoid major stress problems, Meteorlogix reports. 
 

The U.S. Department of Agriculture reported 32.600 million bushels of soybeans were inspected for export in the week ended Dec. 21. The export figure is up 33% from the previous week's 24.519 million bushels. Analysts surveyed by Dow Jones Newswires projected the inspections to fall within a range of 23 million to 29 million bushels. Accumulated soy inspections total 470.741 million bushels, up 23.6% from the 380.946 million bushels reported at the same time last year.

 

In pit trades, ADM Investor Services, UBS Securities and Fortis each bought 500 March. Man Financial bought 600 March, Citigroup bought 400 March and RJ O'Brien bought 500 July. Speculative fund buying was estimated at 2,500 contracts.

 

UBS Securities sold 2,000 March, JP Morgan sold 500 March, Fimat sold 400 January, with Citigroup and Iowa Grain each sellers of 300 March.

 

 

SOY PRODUCTS

 

Soy product futures climbed in unison with soybeans. Soyoil futures were the upside leader of the products, with futures gapping above major moving- average resistance. The market experienced some thin holiday exaggerated gains, with technically inspired buying a featured attraction, traders said. Optimistic long-range demand prospects related to biodiesel coupled with speculative buying ahead of expected first of the year and quarter index fund buying as well as firm overnight prices in Malaysian Palm oil aided to the session's gains, Kleist added.

 

Soymeal futures propelled higher in unison with the rest of the complex, buoyed by technically related speculative buying, traders said.

 

January oil share ended at 43.37% and the March crush ended at 63 cents.

 

In soymeal trades, Tenco bought 600 January, Fortis bought 500 March and Man Financial bought 300 March. Fortis sold 1,400 March, JP Morgan sold 800 March, and Fimat sold 600 January.

 

In soyoil trades, Stern bought 1,000 March, ADM Investor Services bought 800 March, UBS Securities bought 600 March. Man Financial, Fortis, Shatkin/Arbor and Tenco each bought 500 March. Speculative fund buying was estimated at 6,000 contracts.