October 24, 2008

 

CBOT Soy Review on Thursday: Bounce on technical buys, fundamental support

 

 

Soybean futures on the Chicago Board of Trade settled higher Thursday, bouncing on technical buying and supportive underlying fundamentals.

 

CBOT November soybeans ended 25 1/2 cents higher at US$8.84 1/2 a bushel, January soybeans finished 23 3/4 cents higher at US$8.88 1/2.

 

December soymeal settled US$11.70 higher at US$269.00 per short tonne. December soyoil finished 48 points lower at 32.82 cents per pound.

 

Oversold market conditions following recent setbacks opened the door for the advances. Supportive export demand, weather conditions that poise threats to unharvested soybean crops and firm cash prices amid tight farmer holding of supplies provided a fundamental boost to lift prices, analysts said.

 

Early price support from firm equity and energy prices added to the bullish tonnee. But once those markets pared their gains and stock markets turned lower, futures eased off highs on late profit-taking pressure, analysts added.

 

The uncertainty of the global economy remains a drag on upside movement, but signs of strong export demand for soybeans and soy products are underpinning forces to offset some bearish market psychology.

 

The DTN Meteorlogix forecast calls for rain of up to 1.5 inches additional moisture in the western Midwest - on top of heavy rains of up to 2 inches already taken in - and up to 1 inch over the eastern Midwest during the next three days. This moisture will further delay harvest in the western Midwest and will bring some harvest delays to the recently more-favored eastern Midwest.

 

In pit trades, speculative fund buying was estimated at 4,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal rallying in unison with soybeans, while soyoil stumbled on spread trades.

 

Soymeal garnered support from technical buying and strong demand, analysts said. Higher-than-expected weekly export sales and lower-than-anticipated monthly stocks in the Census crush report were fundamental drivers aiding the firm tonnee, analysts added.

 

The U.S. Department of Agriculture reported total weekly soymeal sales at a net 263,600 tonnes, above trade estimates ranging from 125,000 to 200,000 tonnes.

 

The U.S. Census Bureau pegged September soymeal stocks at 293,929 short tonnes, down from the 415,343 tonnes in August, and below the average of estimates at 336,000 tonnes. Soyoil stocks came in at 2.528 billion pounds, down from August stocks of 2.546 billion, but above the average estimate of 2.416 billion pounds.

 

Soyoil futures finished lower, failing to sustain early price strength on meal/oil spreading, crude oil pulling off its highs and a higher-than-expected stock figure in the crush report, traders said.

 

December oil share ended at 37.89% and the November/December crush ended at 68 1/4 cents.

 

In pit trades, speculative fund buying was estimated at 2,000 lots in soymeal and 1,000 lots in soyoil.