Chicago Board of Trade soyabean futures soared on Wednesday, supported by the strength in soyabean oil and crude oil, traders said. "Crude oil took off and grabbed a hold of the bean oil. Then the beans took notice," said Joe Victor, analyst with Illinois-based brokerage firm Hallandale.
Given the increased speculative money invested in commodity markets, they tend to move in tandem. The rally in the New York crude oil market of more than $1 per barrel after the government reported a surprising drop in US crude stock inventories led to slipover buying in the CBOT soya complex. Additionally, the soyabean market was due for a bounce after sliding to a one-month low this week, following a sell-off in the global equity markets.
"Even on Monday, corn and wheat were able to rebound but beans stuck behind. We're finally starting to build that differential back in between corn and beans," Victor added. March soyabeans closed 9-3/4 cents per bushel higher at $7.42-3/4. May settle 9-1/2 up at $7.57-1/4. March soyameal ended $4 per ton firmer at $217.50, with the back months up $2.30 to $3.30.
March soyaoil closed 0.40 cent higher at 29.85, with the deferred months up 0.28 to 0.36 cent. Commodity funds bought 7,000 soyabean futures, 3,000 soyaoil and 1,000 soyameal, traders said. UBS Warburg was the featured buyer with 3,500 May soyabeans. Light commercial buying in soyameal added strength to meal. Some support stemmed from a truck driver's strike in Argentina, the world's top soyameal exporter, which has virtually paralysed trade, union officials and traders said.
Truckers are demanding a raise in grain freight rates but negotiations to end the strike have made little progress. Soyabean harvest has yet to start in Argentina but is progressing in Brazil.
Both countries are expected to harvest bumper crops, adding to world supplies. Analysts expected the US Agriculture Department to hike its estimate of the South American soyabean crop by 1 million to 2 million tonnes On Friday's monthly crop report. However, they expected few, if any changes to USA's 2006/07 US soyabean end stocks estimate. There was another round of March deliveries overnight, underscoring the weakness in US cash markets.
In soyabeans, there were 895 deliveries, with a Man Professional customer posting 360 deliveries and another Man customer stopping 293. Soyameal deliveries of 180 lots were the lowest since the start of the delivery period and were met by strong commercial stopping. The ADM house account took 131 contracts. There were 1,198 soyaoil deliveries, with a Fimat customer issuing 502 and a Man customer stopping 378.
Spot basis bids for soya in the US Midwest were steady after the weeklong drop in US futures prices. Farmer sales were quiet despite the day's rally in soyabeans, dealers said.
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