December 29, 2006

 

CBOT Soy Review on Thursday: Up on technical buying, soyoil strength

 

 

Chicago Board of Trade soybean futures ended the last full trading day of 2006 at moderately higher levels, buoyed by technical buying and borrowed momentum from price strength in vegoil markets.

 

January soybeans finished 6 1/4 cents higher at US$6.75 3/4, and March soybeans ended 5 1/4 cents higher at US$6.90 1/2. March soymeal settled US$0.60 higher at US$194.40 per short tonne, while March soyoil ended 33 points higher at 29.71 cents a pound.

 

The market took its cue from overnight activity, with sharply higher palm oil prices setting the stage for the gains, analysts said. Technical strength added support to keep buyers sidelined, analysts added.

 

Overall activity was relatively quiet, with futures trimming initial gains amid the exhaustion of early buys, as traders were unwilling to take on added risk in the last full trading session of the year, a CBOT floor trader said.

 

Optimistic long range demand forecasts, with reduced U.S. acreage outlooks for 2007, provided underlying support to lifted deferred month futures to new contract highs, a floor analyst said.

 

Otherwise, the market had few directive influences, but light positioning ahead of Friday's first notice day and bearish South American weather remained underlying themes in the market, a trader added.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said South America soybean areas continue to have a mostly favorable weather pattern for crops. A period of drier weather will move into southern Brazil and Argentina during the next five days, along with hotter temperatures - highs approaching the upper 90s Fahrenheit. However, recent rains have provided a good supply of soil moisture for these regions, and stress from the hotter and drier weather is expected to be minimal, Meteorlogix forecast.

 

On tap for Friday, first notice day for January futures is expected to produce light soybean deliveries and moderate to large soyoil/soymeal deliveries. Analysts expect deliveries against the CBOT January soybean contract to fall in a range of zero to 800 lots, with most analysts leaning toward a range of 300 to 600 lots. Soyoil delivery notices are expected in a range of 1,500 to 2,000 contracts, while soymeal deliveries are seen between 300 and 2,000 lots.

 

The U.S. Department of Agriculture is scheduled to release its weekly export sales report at 7:30 a.m. CST. Analysts surveyed by Dow Jones Newswires anticipate soybean commitments in a range of 500,000 to 750,000 metric tonnes. Soyoil sales are seen between 25,000 and 50,000 metric tonnes and soymeal sales are expected to fall between 75,000 and 150,000 tonnes.

 

CBOT grain and oilseed markets close at 12 p.m. CST Friday.

 

In pit trades, speculative funds were light buyers on the day. Buyers and sellers were lightly scattered among various commission houses; RJ O'Brien was a buyer of 300 March and Term Commodities a seller of 400 March.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, with the soyoil leading the upward move. Soyoil futures gapped higher on technical charts, buoyed by speculative buys associated with borrowed strength from 8-year highs in Malaysian palm oil futures.

 

The market in general has a bullish outlook, with prices continuing to rally off its December lows amid optimistic long range demand prospects, with a sharp bounce in Malaysian palm oil providing a spark, said Anne Frick, senior oilseed analyst with Prudential Financial in New York.

 

Soymeal futures finished higher, ending a mixed session up on spillover support from the rest of the soy complex, analysts said

 

January oil share ended at 43.60% and the March crush ended at 64 cents.

 

In soymeal trades, Bunge Chicago bought 300 March and Iowa Grain bought 600 January. Bunge Chicago sold 600 May, and Fortis sold 300 May.

 

In soyoil trades, Citigroup bought 800 March, and Tenco bought 400 March and 400 July. Speculative fund buying was estimated between 1,000 and 2,000 contracts. Sellers were lightly scattered among various commission houses.