November 4, 2005

 

CBOT Soy Review on Thursday: Soars on Spec buying; scores tech bounce

 

 

Soybean futures at the Chicago Board of Trade ended sharply higher Thursday, matching a two-week high on a technically motivated bounce and fundamental support from firm cash prices and strong weekly export sales for soymeal.

 

November soybeans ended 18 1/4 cents higher at US$5.91 3/4, January soybeans finished 16 3/4 cents higher at US$6.01 3/4, December soymeal settled US$4.40 higher at US$178.30 a short tonne, and December soyoil ended 69 points higher at 23.53 cent a pound.

 

The absence of hedge-related selling at the end of the harvest has brought cash prices up, and solid soymeal exports in the face of bird flu worries generated a spark to push futures through key technical levels, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

The ability of active contracts to break through chart resistance at major trend lines and the 50-day moving averages uncovered a lot of buy-stops orders, Hannagan added.

 

Ideas that the market's bearish inputs were adequately factored into prices and that a near-term low was in place took the incentive of pressing prices away from traders, with bullish technical signals pulling buyers off the sidelines.

 

Analysts said the ability of the January future to settle above the psychological US$6.00-per-bushel level provided fresh technical momentum to market bulls.

 

However, some analysts said particcpants have to be careful not to get too far ahead of themselves, as futures have not managed to break out of its recent trading range. The potential for a pickup in farmer selling following the rally, adequate nearby supplies and an export sales pace that lags last year's sales by 24% continue to hang over the market.

 

In pit trades, ABN Amro, Citigroup, Calyon Financial, Iowa Grain, Rand Financial, Refco, Tenco and Shatkin/Arbor were featured buyers. Commodity fund buying was estimated at 7,000 contracts.

 

South American soybean futures ended higher across the board. The November futures settled 16 cents higher at US$6.56.

 

 

SOY PRODUCTS

 

Soymeal futures ended firm, supported throughout the day by speculative buying amid higher-than-expected weekly export sales and technical strength. The active December contract rallied to a seven-week high, managing to climb above meaningful resistance at its 50-day moving average.

 

USDA reported soymeal sales at 304,700 tonnes, well above estimates ranging from 100,000 to 200,000 tonnes. The sales were a big boost to prices, and analysts were encouraged by active foreign buying in the face of all the talk of bird flu and poultry slaughters in Asia, said Hannagan.

 

Soyoil futures ended sharply higher, soaring to one-week highs in late dealings. Speculative and commercial buying were featured attractions, with a late rally in crude oil futures serving as the catalyst for the late bounce. The market has tracked the volatile movements of the energy sector as higher petroleum prices bring more attention to biodiesel fuel derived from soyoil.

 

December oil share ended at 39.75%, and the November/December crush was at 59 1/4 cents.

 

In soymeal trades, Refco Investor Services, Man Financial, O'Connor and Rand Financial were key buyers. Cargill and Refco were featured sellers. Fund buying was estimated at 3,500 contracts.

 

In soyoil trades, active buying and selling was scattered among various commercial and commission house firms.