January 9, 2009

 

CBOT Soy Review on Thursday: Drifts lower, profit-taking weighs late

 

 

Chicago Board of Trade soybean futures ended with modest declines Thursday, pulling back from earlier gains on late profit-taking and speculative selling.

 

CBOT March soybeans finished 1/2 cent lower at US$9.89 1/2.

 

March soymeal settled US$2.80 higher at US$298.30 per short tonne. March soyoil finished 40 points lower at 35.78 cents per pound.

 

The market is in overbought territory and traders showed an unwillingness to take on added risk heading down the stretch in the face of market uncertainty and talk of potential selling from index fund rebalancing, a cash- connected CBOT broker said.

 

Futures pushed higher for most of the day, energized by a "buy price breaks mentality," with strong underlying export demand and weather issues for South American crops providing fundamental strength, said John Kleist, broker/analyst with Allendale Inc.

 

The theme was consistent until a lack of follow-through buying near the highs and recessionary fears set in to attract speculative selling and position evening down the stretch, analysts added.

 

The DTN Meteorlogix weather forecast said central Argentina shows a more variable chance for rainfall during the next five to seven days than seen in Wednesday's outlook. Conditions now appear to favor rainfall of more than one inch in much of Cordoba province in central Argentina. However, the central and southern sectors of Santa Fe, along with western Buenos Aires, will have less rain than indicated Wednesday. This situation bears close watching, due to recent dry weather stress to row crops in the region.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 551,100 metric tonnes for the week ended Jan. 1. Sales for 2008-09 were a net 529,700 metric tonnes. Analysts had forecast sales between 375,000 and 500,000 metric tonnes.

 

USDA also announced private exporters reported export sales of 120,000 metric tonnes of soybeans for delivery to China during the 2008/2009 marketing year, the USDA said Thursday.

 

Meanwhile, analysts anticipate some fine-tuning to the USDA's production and use projections in its annual crop production, supply/demand and quarterly grain stocks reports on Monday. There is a bias among the trade for a decrease in production and increase in exports, resulting in a tighter carryout forecast.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with meal/oil spreading featured.

 

Soyoil futures gave back some product share acquired in a recent rally, garnering pressure from weakness in world vegoil markets and declines in crude oil, analysts said.

 

Soymeal futures climbed, benefitting from corrections in the meal/oil spread and talk of a potential increase in domestic demand amid forecasts for frigid temperatures headed toward the central U.S. next week, analyst said.

 

March oil share ended at 37.6% and the March crush ended at 60 1/4 cents.

 

In pit trades, speculative fund selling was estimated at 2,000 lots in soyoil and 1,000 lots in soymeal.