January 1, 2010

 

CBOT Soy Review on Thursday: Finishes firmer but off session highs

 

 

Strong export demand supported Chicago Board of Trade soy futures Thursday, but the market trimmed gains before the close amid year-end profit-taking.

 

January soy finished up 3 1/2 cents at US$10.39 3/4 per bushel, below its session high of US$10.52 1/4. March soy closed up 4 cents at US$10.48 1/2, below its session high of US$10.61 1/2.

 

Export demand remains supportive for the market, as China continues to be a big buyer of U.S. soy, traders said. Total weekly U.S. soy export sales were strong at 1.075 million tonnes.

 

Demand, particularly from China, has shifted to the U.S. from South America after drought slashed South America's output. That left the U.S. as the world's main soy supplier.

 

"That demand for the beans has stayed longer than most people thought it would," said Larry Glenn, broker and analyst at Frontier Ag. "They keep buying it from us."

 

Traders wanted to book profits at the end of the month and year, a CBOT floor trader said. Next week, they will look to see whether index funds step in as buyers, he said.

 

Expectations for fund buying in early 2010 have been supportive to grains and soy lately, analysts said. There are ideas the anticipation could turn into a "buy the rumor, sell the fact" scenario, they said.

 

Traders continued to keep an eye on weather in South America, as a new crop of soy is approaching a key growing phase. Conditions have been favorable so far, encouraging to sentiment that a big crop will pressure CBOT soy.

 

"I don't trust the beans," Glenn said. "I have a feeling that we will break them. We might need to get closer to making sure that South America has the production that we're expecting."

 

The U.S. will continue to be a seller "into the March/April timeframe, just as the logistics continue to get sorted out in South America," said Dave Marshall, an independent marketing advisor and commodities broker. Brazil and Argentina will have to refill their local pipelines and deal with port capacity issues as the new crop comes on line, he said.

 

 

Soy Products

 

CBOT soy product futures closed mixed. Soymeal dipped even though weekly U.S. export sales of 287,200 tonnes were toward the high end of trade expectations.

 

March soymeal slipped US$2.10 to US$306.10 per short tonne. March soyoil finished up 86 points at 40.78 cents per pound.

 

Soyoil export sales were below expectations. The market felt support from commodity funds buying an estimated 2,000 contracts, a trader said.