December 30, 2006
 
CBOT Soy Review on Friday: Climbs on speculative buys; bullish outlooks

 

 

Chicago Board of Trade soybean futures ended higher, rallying to new highs for the week on late speculative buying amid longer-term bullish fundamental outlooks.

 

January soybeans finished 7 3/4 cents higher at US$6.83 1/2, and March soybeans ended 6 3/4 cents higher at US$6.97 1/4. March soymeal settled US$2.50 higher at US$196.90 per short tonne, while March soyoil ended 1 point lower at 29.70 cents a pound.

 

The market propelled to 4-week highs on light speculative buying in absence of a significant selling presence, analysts said.

 

The thin holiday market allowed futures to extend advances, with solid weekly export sales, technical momentum and bullish demand prospects serving as the catalyst to keep buyers in control of price direction, analysts added.

 

Overall volume was light, but sellers were content to sit on the sidelines, with smaller 2007 acreage outlooks, global demand for vegetable oils and the expected influx on index fund capital into the market attracting speculative buyers, a CBOT floor analyst added.

 

Nevertheless, ample nearby supplies and non-threatening crop conditions in South America managed to provide light pressure to limit upside moves, he added.

 

The DTN Meteorlogix Weather Service forecast said that southern Brazil through Argentina will be mainly dry and very warm to hot during the coming weekend. Temperatures will creep close to 100 Fahrenheit from Rio Grande do Sul, Brazil, south through central Argentina. This will be a short-lived round of heat, however; showers move into the region by Tuesday and Wednesday. Mato Grosso, Brazil, has warm and showery conditions ahead. There is no major crop stress at this time in South America's crop belt.

 

Palm oil production areas of Southeast Asia - Malaysia and Indonesia - have had some damage due to flooding this week. However, the flooding doesn't appear to be a major production issue. Considering El Nino's normal effects - dry weather in Southeast Asia - the heavy rains are a much less damaging alternative. There may be some transportation disruptions because of the flooding, but the recent heavy rains don't pose a threat to production of palm oil thus far, Meteorlogix reports.

 

The U.S. Department of Agriculture said net weekly export sales for soybeans were 1,037,400 metric tonnes. Trade estimates called for commitments in the 500,000 to 750,000 tonne range. Soymeal sales were 108,900 tonnes. Analysts' estimates called for commitments in a range of 75,000 to 150,000 tonnes. Soyoil 2006-07 sales were 61,000 tonnes, a marketing year high. The trade guess was 25,000 to 50,000 tonnes.

 

BOT will be closed Monday in observance of the New Years day holiday. The exchange will close some markets Tuesday in observance of former President Gerald Ford's funeral, according to an exchange schedule issued Friday. In the agricultural products, pit trade will be closed Tuesday, the exchange said. In electronic activity on the e-CBOT platform, trading will open as normal at 6:30 p.m. Monday and will end at 6 a.m. CST Tuesday.

 

In pit trades, JP Morgan and Tenco each bought 400 March, with Fortis selling 500 March.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal the upside leader on the day. Soymeal futures bolted higher in unison with soybeans, buoyed by speculative buying and end of year positioning, traders said. The unwinding of soyoil/soymeal spreads provided a lift to prices, traders added.

 

Soyoil futures ended mixed, drifting lower on end of year positioning. The market shrugged off strong weekly export sales, as recent price strength left futures overdue for a minor setback, a CBOT floor broker said.

 

January oil share ended at 43.26% and the March crush ended at 62 3/4 cents.

 

In soymeal trades, buyers and sellers were scattered across various commission houses, with Fimat selling 500 January and Man Financial and JP Morgan each selling 200 March.

 

In soyoil trades, buyers and sellers were widely scattered among commission houses. Bunge Chicago bought 200 March, Fimat sold 300 March and Stern sold 500 March. Speculative funds were net sellers on the day.