December 10, 2005

 

CBOT Soy Review on Friday: Ends up on cash, soymeal strength

 

 

Chicago Board of Trade soybean futures ended a two-sided session on firm footing Friday, managing to brush aside bearish U.S. Department of Agriculture stocks data on cash strength and spillover momentum from soymeal.

 

January soybeans finished 7 3/4 cents higher at US$5.66 3/4, January soymeal settled US$6.00 higher at US$179.30 a short tonne, while January soyoil ended 3 points higher at 21.22 cent a pound.

 

With smaller exports and a larger carryout projection previously dialed into the market, and a tight cash situation as farmers remain reluctant sellers at current prices, futures were able to find price strength, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

The continuation of speculative fund buying in the neighboring soymeal market provided added support to limit selling pressure, traders added.

 

Futures encountered choppy price action for most of the day, with a lower opening greeted by speculative and commercial buying. The theme was consistent, with buyers emerging on breaks as the trade was anticipating the USDA's adjustments, and without fresh bearish news and cash strength, traders were reluctant to press the market, analysts said.

 

The USDA projected 2005-06 U.S. soybean ending stocks at 405 million bushels, above the average trade estimate of 386 million. The increase in endings stocks was attributed to a 55-million-bushel decrease in U.S. exports.

 

In pit trades, ADM Investor Services bought 400 January, Bunge Chicago and Cargill each bought 300 January, Calyon Financial bought 1,000 January and Fimat bought 500 January. RJ O'Brien, Iowa Grain, Merrill Lynch and UBS Securities were featured sellers.

 

South American soybean futures ended higher. The March futures finished 4 1/2 cents higher at US$6.12.

 

 

Soy Products

 

Soymeal futures ended higher, maintaining their position as the strongest link in the soy complex. The active January futures climbed to nearly one-month highs, bolstered by good underlying demand.

 

Talk of cold temperatures in the central U.S. increasing meal consumption in the livestock sector provided cash strength, with speculative buying coming onboard amid a meal/oil bias, as traders hedge oil shorts with meal length, said a CBOT commission house broker.

 

The December/January spread inverse, with January/March near even illustrates nearby demand strength in the market, he added.

 

Soyoil futures stumbled to nearly 10-month lows, pressured by growing nearby and ending inventory outlooks. Record oil yields projected by the USDA coupled with a 438-million-pound increase in ending stocks set the stage for speculative sellers to firmly plant futures in negative territory. However, underlying commercial buying provided light support limit downside pressure.

 

The USDA on Friday raised its 2005-06 forecasts for soyoil production. The soyoil production forecast is now increased to 19.865 billion pounds, based on a record soyoil yield estimate of 11.5 pounds per bushel. January oil share fell to 36.58%, and the January crush was at 58 3/4 cents.

 

In soymeal trades, Bunge Chicago and Refco each bought 300 January, Fimat and Iowa Grain each bought 300 March, Man Financial bought 1,200 January and 1,100 March, Refco bought 300 January and Shatkin/Arbor bought 400 March. Bunge Chicago sold 600 January, and Cargill sold 1,400 January. Commodity fund buying was estimated at 5,000 contracts.

 

In soyoil trades, Bunge Chicago bought 300 January, Cargill bought 500 January and 400 March, Calyon Financial bought 300 January, Citigroup bought 300 July, Prudential Financial bought 1,200 March, and Tenco bought 400 January and 300 March.

 

On the sell side, Cargill sold 300 January, ABN Amro and Citigroup each sold 500 January, Fimat sold 300 January, and UBS Securities sold 600 January.