US soyabean futures on the Chicago Board of Trade ended higher on Tuesday, bouncing from Monday's sharply lower move when speculators liquidated long positions, traders said. All three soya markets closed locked limit lower on Monday a sign of the general nervousness that rippled through all the CBOT commodities after J.P. Morgan Chase said it would buy stricken rival brokerage Bear Stearns for just $2 a share.
The big fear is that there were other financial firms getting hit by the credit crunch, stemming from subprime woes. Additionally, historically high grain prices were making it tough for grain firms to find financing for short futures positions that are used to hedge cash inventories.
"We beat it up a little more than we should have in regards to Bear Stearns and we're seeing some bounces," said Dan Basse, president of AgResource Co in Chicago. May soyabeans ended 4-1/4 cents higher at $13.07 per bushel and May soyameal closed $6.70 per ton firmer at $330.50.
Soyaoil was the only leg of the complex to end lower, but prices were significantly off their lows. May soyaoil closed 0.16 cent per lb down at 58.40 cents after sliding to 56.56 cents. Volume was large.
In soyabeans, an estimated 193,778 futures and 73,934 options traded. Soyameal trade was pegged at 70,777 futures and 4,013 options. Estimated soyaoil volume was 89,446 futures and 12,916 options. Commodity funds bought 1,000 soyabean contracts, 2,000 soyameal and sold 2,000 soyaoil, traders said. Commercials were net buyers of 1,000 contracts each in soyameal and soyaoil. The big rally in the US stock market lent support to commodities, traders said.
The Dow Jones industrial average was up more than 200 points by the time the CBOT commodity markets closed and jumped another 200-plus points in reaction to the Federal Reserve slashing the funds rate by three-quarters of a percentage point to 2.25 percent. Keeping a lid on CBOT soyabean prices is the advancing South American soyabean harvest, which is increasing the amount of soyabeans moving into marketing channels.
There were concerns that China has sufficient grain reserves and may default on some soyaoil and palm oil orders, traders said. CBOT soyabean oil and Malaysian palm oil futures have been under pressure by ideas of China backing away from the vegoils market, with both sharply lower overnights.
Midwest basis bids for soyabeans had a firmer tone on Tuesday after the big drop in CBOT prices over the past few days, dealers said. Sales were quiet. CIF soyabean values at the US Gulf were also firm, as the pipeline was thin, traders said.
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