November 15, 2006

 

CBOT Soy Review on Tuesday: Ends up, rekindles bullish enthusiasm

 

 

Chicago Board of Trade soybean futures ended Tuesday's session posting solid gains, underpinned by technically inspired buying, with spillover strength from corn and soyoil aiding the bullish cause, traders said.

 

January soybeans finished 13 3/4 cents higher at US$6.71 1/4, and March soybeans ended 15 1/4 cents lower at US$6.84 1/2. December soymeal settled US$2.60 higher at US$194.40 per short tonne, while December soyoil ended 67 points higher at 28.66 cents a pound.

 

The market experienced a resurgence of the speculative buying that buoyed prices heading into last week's U.S. Department of Agriculture reports, said John Kleist, analyst with Top Third Ag Marketing in Chicago.

 

After the USDA report, futures went into a profit-taking mode for three days and now those liquidated positions are coming back reloaded and looking for a home, Kleist added.

 

Lingering perceptions that soybeans have to rally in tandem with corn to secure adequate 2007 acreage aided the advances, with a surge to contract highs in soyoil feeding the bullish theme as well, analysts added.

 

Technically motivated buying was a featured attraction with the ability of the nearby January future to breach resistance at Monday's highs, uncovering pre-placed buy orders to extend the advances, traders said. Commercial buying was noted during the day as well.

 

Prior selling pressure took some layers of resistance off the market, creating some air pockets overhead, enabling futures to push higher, Kleist said. Slow farmer selling and supportive underlying export and domestic demand are fundamental features that have aided the market's ability to bounce back, a CBOT floor analysts said.

 

In pit trades, Calyon Financial and JP Morgan each bought 500 January, and Citigroup and Rand Financial each bought 400 January. Bunge Chicago bought 400 January and 400 March. Speculative fund buying was estimated near 2,000 contracts. Man Financial sold 1,000 January.

 

Day session volume on the e-CBOT platform was 33,293 contracts.

 

South American soybean futures ended higher, with the November future settling 10 cents higher at US$7.16.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, rallying on speculative-led buying. Soyoil futures were the upside leader, gaining product share on speculative buying attributed to long-range demand prospects. Market perceptions that somewhere down the road food for fuel will drawdown ample U.S. soyoil stocks are serving as a catalyst to keep speculative buyers enthused, said Kleist. The nearby December future climbed to its highest level since July, matching its contract high of 28.70 cents per pound.

 

Soymeal futures propelled higher as well, feeding off the speculative pushed that underpinned the rest of the soy complex, traders said. However, the resurgence in soyoil generated light pressure on spreads to limit upside movement, traders added.

 

December oil share ended at 42.43% and the December/January crush ended at 71 3/4 cents.

 

In soymeal trades, buyers and seller were scattered among various commission houses, with speculative funds net buyers on the day.

 

In soyoil trades, speculative fund buying was estimated between 2,000 and 3,000 contracts, with UBS Securities a featured buyer of 1,000 March. Otherwise, buyers and sellers were scattered among various commission houses.