January 9, 2010

 

CBOT Soy Review on Friday: Extend downturn on supply, demand questions

 

 

Soybean futures at the Chicago Board of the Trade ended lower for the third consecutive day Friday, extending its recent downturn on bearish supply outlooks and lingering demand fears.

 

CBOT January soybeans ended 4 3/4 cents lower at US$10.13, and March soybeans settled 4 cents lower at US$10.22.

 

Speculative funds were estimated sellers of 4,000 lots in soybeans, and 2,000 lots in soyoil.

 

The fundamentals of the market have turned soft on South American crop progress and the threat of slowing Chinese soybean demand, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

China, the world's biggest soybean consumer, may have overbooked its early needs and might not be shopping soon, and Thursday's news of a tighter monetary policy for the Asian nation makes it more expensive for importers to buy.

 

A potential record crop in Brazil and higher production in Argentina will provide ample world soybean supplies.

 

Technical selling added another bearish twist to the market, as the ability of futures to drift below key chart support attracted speculative sellers, analysts said.

 

However, futures did manage to trim its losses down the stretch. The market found support from sellers' caution ahead of anticipated index fund rebalancing, the uncertainty of Tuesday's crop reports and weakness in the U.S. dollar following a weaker-than-forecast report on December U.S. non-farm payrolls.

 

Otherwise, traders evened some positions ahead of the weekend, particularly with Tuesday's U.S. Department of Agriculture January crop report prone to offer surprises, analysts said.

 

USDA is scheduled to release final 2009 production forecasts, updates to the soybean supply and demand tables and quarterly usage at 8:30 a.m. EST Tuesday.

 

The average of analysts' estimates anticipates U.S. soybean production for the 2009-10 marketing year at 3.337 billion bushels versus 3.319 billion in the USDA's November report. The average of analyst's estimates peg soybean ending stocks at 237 million bushels, down 18 million from December's forecast.

Soy Products

 

Soy product futures ended mixed, with soymeal gaining product share at the expense of weak soyoil futures. Soyoil futures stumbled to nearly two-week lows before trimming declines, pressured by the unwinding of oil/meal spreads and weakness in world vegoil markets. Traders said underlying fears of a diminished U.S. biodiesel industry cutting soyoil domestic usage added some mild pressure.

 

January soymeal ended US$0.20 lower at US$306.80 per short tonne, while March soymeal settled at US$0.10 higher at US$298.30. January soyoil fell 46 points, or 1.2%, to 39.53 cents per pound, while March soyoil dropped 45 points, or 1.5%, to 39.91.

 

March oil share was 39.94% while the March soybean crush ended at 76 1/4 cents.