January 14, 2010

 

CBOT Soy Review on Wednesday: Bounce from recent declines on speculative buys

 

 

Soy futures on the Chicago Board of Trade ended higher Wednesday, staging a modest recovery from a five-day slide on speculative buying.

 

CBOT January soy ended 14 cents higher, at US$9.83 1/2, and March soy settled 14 1/2 cents higher, at US$9.92 1/2.

 

Speculative funds were estimated buyers of 6,000 lots in soy, 2,000 lots in soymeal, and 2,000 lots in soyoil.

 

The market managed to bounce higher after finding solid support amid trader ideas that recent losses were overdone in the near term.

 

Futures experienced some nice recovery type trade, benefiting from the exhaustion of selling pressure, the stabilizing of corn futures, and short covering in anticipation of a return of index fund rebalancing buying, said Jack Scoville, analyst with Price Futures Group.

 

The market was overdue for a bounce after dropping more than 80 cents in the previous five trading sessions, particularly without any major surprises in Tuesday's crop reports.

 

However, the market maintains a bearish landscape, with the potential for record crop production from the three major world soy producers in the same year making it tough to get bullish on the market, said Dan Basse, president of AgResource Co.

 

There is just a huge amount of soy supplies expected between the U.S., Brazil and Argentina, and with the possibility of China demand slowing, upside movement will remain capped, Basse added.

 

On tap for Thursday, the National Oilseed Processors Association's monthly soy crush report for December is scheduled to be released at 8:30 a.m. EST (1330 GMT). The soy crush report for December is expected to rise from the previous month, coming in near 161.1 million bushels, according to a survey.

 

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 Jan. 7 to be in the range of 600,000 to 800,000 metric tonnes. Soymeal export sales are seen between 75,000 and 200,000 tonnes, while soyoil sales are pegged between 5,000 and 10,000 tonnes.

 

 

Soy Products

 

Soy product futures ended higher Wednesday, rallying to session highs down the stretch on late fund buying. Soymeal futures held firm throughout the session, buoyed by early product spreading and a solid export profile, analysts said.

 

Soyoil futures managed to bounce back from weakness that plagued prices for most of the day. Spillover weakness from crude oil futures weighed on prices, but a late spate of index fund buying and speculative short-covering was enough to lift prices firmly into positive territory heading toward the close, analysts said.

 

January soymeal ended US$5.10 higher, at US$300.50 per short tonne, while March soymeal settled US$5.70 higher, at US$291.50. January soyoil climbed 37 points, or 1%, at 38.63 cents per pound, while March soyoil rose 38 points, or 1% to 39.01.

 

March oil share was 40.12%, while the March soy crush ended at 78 cents.