January 6, 2010

 

CBOT Soy Review on Tuesday: Soy rise, extend gains from Monday

 

 

Expectations for index fund buying later in the week and continued bullishness about demand nudged Chicago Board of Trade soy futures higher on Tuesday.

 

March soy ended up 3 cents at US$10.61 a bushel, near its session high of US$10.64 1/2.

 

Traders were leery of selling the market amid expectations for index funds to buy later in the week as part of a rebalancing, a CBOT floor analyst said. Market participants are unsure of exactly how many contracts the funds will buy, if they show up as buyers.

 

Commodity funds bought an estimated 3,000 contracts.

 

The market bounced after pulling back in early dealings from a rally Monday. The action continued a pattern of traders buying breaks in the market, said Tim Hannagan, analyst for PFG Best.

 

There continues to be bullishness about strong demand from China, which has been an aggressive buyer of U.S. soy, Hannagan said. Traders will keep buying dips until China changes its purchasing habits, he said.

 

Technical charts indicate soy may be preparing for a leg down, depending on what happens with the index funds, said John Kleist, broker and analyst for Allendale. The market has developed a pattern of rallying and collapsing since March soy hit an open outcry session high of US$10.83 on Dec. 1, he said.

 

The contract has since been unable to take out the high. It touched US$10.74 1/2 on Monday after climbing from a low of US$9.93 on Dec. 22.

 

 

Soy Products

 

CBOT soy product futures finished mixed, with soymeal following soy higher. There continues to be some talk about the potential for increased soymeal feedings to livestock due to cold U.S. weather, an analyst said.

 

Commodity funds bought an estimated 1,000 soymeal contracts and sold an estimated 2,000 soyoil contracts, floor traders said.

 

March soymeal closed up US$3.10 at US$311.40 per short tonne. March soyoil dropped 19 points to 41.10 cents per pound.

 

Soyoil slumped, despite gains in crude oil. Strength in crude oil often provides spillover support to soyoil.