January 7, 2010

 

CBOT Soy Review on Wednesday: Lower on South America prospects, export worry

 

 

Soy futures on the Chicago Board of Trade settled lower Wednesday, pressured by bearish South American crop prospects and worries of diminishing U.S. export demand.

 

CBOT January soy ended 1 3/4 cents lower at US$10.50 1/2, and March soy settled 2 cents lower at US$10.59.

 

Speculative funds were estimated sellers of 4,000 lots in soy, 1,000 lots in soymeal, and 2,000 lots in soyoil.

 

Favorable weather conditions for developing South American crops served as the catalyst for the session's losses, said Jack Scoville, analyst with Price Futures Group.

 

The market encountered some South American hedge pressure, as increasing forecasts for Brazil and Argentina crops sparked talk of demand shifting from U.S. origins to the southern Hemisphere, Scoville said.

 

The market lacked upside potential despite supportive outside market influences. Futures consolidated within the week's trading range, with bearish supply forecasts capping upside moves while anticipation of speculative fund buying later in the week tied to index funds rebalancing positions kept a floor beneath prices.

 

The absence of a speculative fund buying presence left futures without an upside push amid the lack of real fundamental strength to buoy prices, analysts say. Traders were seemingly content to take a cautious approach, awaiting a pickup in fund participation and the release of next week's crop reports.

 

The DTN Meteorlogix weather forecast said Brazil and Argentina are seeing the best growing season they have had for several years. Conditions are expected to be mostly dry through Sunday, but more rain is expected Sunday or Monday for Argentina. Mato Grosso in Brazil will see showers Friday while other areas in Brazil will get showers this weekend, Meteorlogix forecasts.

 

The U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EST Thursday. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Dec. 31 to be in the range of 400,000 to 1,000,000 metric tonnes. Soymeal export sales are seen between 100,000 and 300,000 tonnes, while soyoil sales are pegged between zero and 25,000 tonnes.

 

 

Soy Products

 

Soy product futures ended mixed. Soyoil futures settled on both sides of unchanged levels, with nearby contracts weaker and deferred months firmer. The market managed to climb from earlier losses on spillover support from a bounce in crude oil futures, analysts said. Futures consolidated for most of the session, pinned in negative territory despite the strength in crude oil futures.

 

Soymeal futures stumbled lower in unison with soy. Outlooks for a pickup in soymeal feed demand due to frigid central U.S. weather provided support, but without a push from cash market prices, futures lacked upside momentum, traders said.

 

January soymeal ended US$1.50 lower at US$317.90 per short tonne, while March soymeal settled at US$1.20 lower at US$310.20. January soyoil finished 4 points lower at 40.67 cents per pound, while March soyoil ended 3 points lower at 41.07.

 

March oil share was 39.76 while the March soy crush ended at 75 1/4 cents.