January 12, 2010

 

CBOT Soy Review on Monday: Price erosion continues; technical, fundamental views

 

 

Soy futures at the Chicago Board of Trade fell for the fourth consecutive trading day Monday, as speculative selling continued to erode prices amid bearish technical and fundamental outlooks.

 

CBOT January soy ended 11 1/4 cents lower at US$10.01 3/4, and March soy settled 11 1/2 cents lower at US$10.10 1/2.

 

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

 

The market has taken on a bearish persona, looking past a potential reduction in government carryout forecasts on trader expectations that exports will soon drop off as demand shifts to South American origins, said John Kleist, broker/analyst with Allendale Inc.

 

Recent declines have caused some technical damage as well, making it tough for the market to recoup recent declines with fresh supplies ready to fill the cash pipeline in South America, he added.

 

Technical selling helped pin prices in negative territory, with declines accelerating near midday once pre-placed sell-stop orders were triggered as prices dropped below Friday's lows.

 

Otherwise, traders took a cautious approach, awaiting the release of Tuesday's crop reports to see what the market is made of. Mixed signals for outside markets failed to generate buying support to offset the defensive theme.

 

U.S. Department of Agriculture is scheduled to release final 2009 production forecasts, updates to the soy supply and demand tables and quarterly usage at 8:30 a.m. EST Tuesday.

 

The average of analysts' estimates anticipates U.S. soy 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 soy ending stocks at 237 million bushels, down 18 million from December's forecast.

 

 

Soy Products

 

Soy product futures ended lower in step with soy. Soyoil futures stumbled on the heels of sharply lower Malaysian palm oil futures overnight and technical weakness associated with the ability of active contracts to penetrate support at Friday's session lows, said Mike Zuzolo, president of Global Commodity Analytics and Consulting.

 

Soymeal futures retreated with the rest of the complex, pressured by bearish fundamental outlooks amid the anticipation of increased competition from South America.

 

January soymeal ended US$2.10 lower at US$304.70 per short tonne, while March soymeal settled at US$2.20 lower at US$296.10. January soyoil fell 34 points, or 1.2% at 39.19 cents per pound, while March soyoil dropped 36 points or 1.5% to 39.55.

 

March oil share was 40.02% while the March soy crush ended at 76 cents.