April 19, 2006

 

CBOT Soy Review on Tuesday: End up; soyoil, outside markets buoy

 

 

Soybean futures on the Chicago Board of Trade extended to new two-week highs Tuesday, rallying on speculative-led buying. Spillover momentum from soyoil and the supportive influence of inflationary markets underpinned prices.

 

May soybeans finished 4 cents higher at US$5.75 1/2; July soybeans ended 4 1/4 cents higher at US$5.89 3/4; July soymeal settled 10 cents lower at US$178.30 a short tonne; and July soyoil ended 58 points higher at 23.71 cents a pound.

 

The market was buoyed by the funds, with strength in outside markets serving as the catalysts for the gains, analysts said.

 

The supportive tonnee was kick-started in the soyoil pit, with the spike in crude oil futures and metals prices producing inflationary concerns. With multi-decade highs in metals and crude oil over US$71 per barrel, the investment community looked for the hard assets to stave off the effects of inflationary signs, said Joe Victor, analyst with Allendale Inc. in McHenry, Ill.

 

Otherwise, futures had little to spur upside movement. Prices struggled to break out of a narrow range in early action in the midst of consolidative action. This was consistent, until speculative momentum from soyoil filtered across the trading floor to ignite a spark that carried prices firmly into positive territory for the remainder of the day, traders said.

 

In pit trades, ADM Investor Services, Fimat and RJ O'Brien were key buyers. Commodity funds were estimated buyers of 1,000 lots on the day.

 

On the sell side, ADM Investor Services was a seller of 300 May; FCStonnee sold 800 May; and Goldenberg Hehmeyer sold 400 July.

 

South American soybean futures ended lower. The July futures contract finished 8 cents lower at US$6.05.

 

 

SOY PRODUCTS

 

Soyoil futures soared to one-month highs Tuesday, taking on a leadership role in the soy complex. Nearby futures raced to one-month highs, with speculative fund-led buying and commercial interest buoying upside momentum. Inflationary concerns attributed to record high crude oil futures prices and broad-based commodity fund buying catapulted futures to higher levels.

 

The spike in crude oil prices increases the country's awareness of its need to find alternative energy sources, increasing speculative interest in biodiesel fuel. Since there is no biodiesel fuel futures contract for the speculative community to invest in, they turn to soyoil for energy-related inflation hedges, said Victor. Biodiesel is derived form vegoils.

 

Soymeal futures ended mixed, hovering near unchanged levels as the market struggled to find support amid the absence of fund-related buying and soyoil/soymeal spreading activity, traders said.

 

July oil share ended higher at 39.94%, and the July crush was at 63 1/4 cents.

 

In soymeal trades, buyers were scattered among various commission houses. JP Morgan was the featured seller of 1,000 May and 1,200 July.

 

In soyoil trades, Bunge Chicago bought 1,000 July; Citigroup bought 600 July; Man Financial bought 700 July; and Rand Financial bought 600 July and 400 December. Commodity fund buying was estimated between 4,000 and 5,000 contracts.

 

JP Morgan sold 1,500 July and UBS Securities sold 800 July.