December 31, 2005

 

CBOT Soy Review on Friday: Ends yr strongly; rallies on spec buying

 

 

Soybean futures on the Chicago Board of Trade closed out 2005 strongly, rallying into Friday's close on a late bout of speculative buying, traders said.

 

March soybeans finished 4 3/4 cents higher at US$6.13 1/2, March soymeal settled US$1.50 lower at US$196.30 a short tonne, while March soyoil ended 74 points higher at 21.90 cent a pound.

 

A general unwillingness of traders to press the short side of the market amid ideas commodity index funds will reallocate money into grain and oilseed futures next week set the stage for the late turnaround, analysts said.

 

Speculative buying was a featured attraction, with end of the day position evening helping ignite upside momentum. Bullish traders were encouraged that all grain and oilseed futures included in commodity indices rallied in unison. The gains fed speculation that index fund buying is coming, with traders unwilling to hold onto shorts heading into a long holiday weekend, said a CBOT commission house broker.

 

Carryover selling from Thursday's late collapse weighed on prices for most of the day, with talk of increased chances of rain in parched areas of South America adding to the defensive tonnee. This was consistent, until the late buying spurt uncovered pre-placed buy orders and sent early sellers running for cover.

 

Meanwhile, DTN Meteorlogix said showers and storms in Argentina will advance into Santa Fe and Buenos Aires provinces, with rainfall of up to one-half inch. The rains will help to keep crop stress held in check over the New Year's holiday weekend. Southern Brazil has a good chance of rainfall this weekend as well, mostly in Parana. The overall rainfall totals will range from three-tenths inch to one and one-half inches.

 

From mid to late next week, the DTN Meteorlogix forecast calls for dry and hot weather to develop in central Argentina. Temperatures will range from 94 to 98 degrees Fahrenheit. Areas which do not receive the weekend thunderstorms may have crop stress from this intense heat. Some of the hot weather may encroach north into Brazil's Rio Grande do Sul as well, Meteorlogix added.

 

Ahead of the open, U.S. Department of Agriculture said 2005-06 marketing year weekly sales totaled 890,200 tonnes. Pre-report estimates ranged from 550,000 to 750,000 tonnes. Soymeal sales were 81,800 tonnes, a figure within the range from 25,000 to 125,000 tonnes. Net sales of 7,500 tonnes were reported for soyoil. Trade guesses called for commitments in a range of zero to 10,000 tonnes.

 

In pit trades, ABN Amro, RJ O'Brien, Refco and UBS Securities were featured buyers. Sellers included Calyon Financial, Merrill Lynch, RJ O'Brien and Tenco.

 

South American soybean futures finished firm. The March futures ended 5 cents higher at US$6.35.

 

 

SOY PRODUCTS

 

Soymeal futures ended lower across the board, pressured by a correction in soymeal/soyoil spreads. Soymeal lost product share to soyoil, unable to garner enough speculative buying to offset the lower tonnee.

 

Soyoil futures soared to higher levels, bolstered by speculative buying as the market continued its corrective phase from multi month lows. General ideas the market was oversold and stood poised to reap the benefits of commodity index fund buying early in 2006 set the stage for its price spike heading into the close, traders added.

 

March oil share climbed to 35.81%, and the March crush was at 59 1/4 cents.

 

In soymeal trades, Cargill, Man Financial and Refco were featured buyers with Bunge Chicago, Man Financial, RJ O'Brien and Tenco key sellers.

 

In soyoil trades, RIS Div of Man Financial, Citigroup Fimat, Man Financial, Rand Financial and Rosenthal were featured buyers.