Soyabean futures at the Chicago Board of Trade closed higher on Friday on a technical bounce supported by the rally in soyaoil, traders said. CBOT soyabean oil prices got a lift from strong demand for vegetable oils world-wide as the biodiesel industry expands.
"Oil prices in China have been up every day this week. Palm oil overnight was up $10 a tonne in the cash and some 45 points in the futures - that's a big rally for palm oil ... so the oil market is leading the bean trade," said Roy Huckabay, analyst with The Linn Group.
In Europe, palm oil prices have jumped to a two-year in the past week. The strength came amid this week's news that several companies were either building or expanding biodiesel production. Among the announcements was one from Archer Daniels Midland. ADM plans to build a biodiesel plant in Mato Grosso, Brazil, that will use 180,000 tonnes of soyaoil per year. August soyaabeans closed 2-1/2 cents higher at $5.76-1/2 per bushel. New-crop November was up 3 at $5.98.
August soyaoil closed 0.52 cent per lb higher at 26.39 and the back months were up 0.47 to 0.56. The weakest of the complex was soyameal, closing $1.40 per ton lower to up 70 cents. August meal was down $1.40 at $163.80.
Soyabeans were due for a technical bounce after sliding to a one-month low on Thursday. November was trading below all moving averages. Despite Friday's firm close its nine-day relative strength index stood at 37 - just above the 30 level viewed as a technically oversold market.
Additionally, traders were nervous about extending their short positions in soyabeans before a summer weekend that was expected to see temperatures climb into the 90s degrees Fahrenheit or 100s. Traders are most concerned about the western Midwest, where soyabeans are driest and in the midst of their key pod-setting and -filling stage of growth.
"Basically for the next three to five days there will be hot temperatures followed by showers and not as hot so the roller-coaster ride continues," said Meteorlogix forecaster Joel Burgio. Commodity funds bought 5,000-6,000 soyaoil contracts, 2,000 soyabean futures and sold 1,000 soyameal.
Volume as moderate. Estimated soyabean trade was 90,149 futures and 23,166 options. Soyameal volume was pegged at 48,150 futures and 1,996 options. Soyaoil trade was seen at 36,866 futures and 4,085 options.
Monday is first notice day for August soyabean, soyameal and soyaoil deliveries, with large deliveries expected. Spot basis bids for soyabeans in the Midwest on Friday were steady to weak after scattered light farmer sales this week, traders said.