January 16, 2010

 

CBOT Soy Review on Friday: Retreats on supply outlooks, outside markets

 

 

Soybean futures on the Chicago Board of Trade stumbled Friday, backpedaling on supply outlooks and bearish outside market influences.

 

CBOT March soybeans ended 10 cents lower at US$9.74, and March soybeans settled 10 1/2 cents lower at US$9.80 1/4.

 

Speculative funds were estimated sellers of 6,000 lots in soybeans and 2,000 lots in soyoil.

 

Rising South American production prospects amid favorable weather conditions, fears of declining Chinese demand and a firmer U.S. dollar served as the backdrop to keep prices on the defensive, analysts said.

 

Consolidative price action was a feature, with prices hovering within Tuesday's wide trading range while staying pinned below overhead resistance levels. The fear of ample world soybean supplies amid record U.S. output followed by record production from South America kept buyers in a cautious mode. Broad-based commodity weakness associated with a firmer U.S. dollar provided another bearish factor to pin prices in negative territory.

 

However, the ability of futures to hold above Tuesday's lows was seen as a prelude to further price consolidation, with traders taking some profits on short positions ahead of the extended holiday weekend.

 

Looking ahead, soybean prices are poised to remain in a downturn for the next few weeks, as the market transitions from a demand bull market to a supply bear, analysts said.

 

CBOT markets will be closed Sunday evening as well as Monday in observance of the Martin Luther King Jr. holiday.

Soy products

 

Soy product futures ended mixed, with spreading between the products a featured attraction. Soyoil futures tumbled to new two-month lows, succumbing to speculative sales amid spillover weakness from crude-oil futures and worries of amply U.S. and world vegoil inventories, analysts said.

 

Soymeal futures ended higher, continuing to stabilize from prior declines. Strong underlying export demand and firm cash basis levels served as underpinning features to promote adjustments in the meal/oil spread in favor of soymeal, analysts said.

 

March soymeal settled US$1.30 higher at US$291.70. March soyoil fell 100 points, or 2.6%, to 37.53 cents a pound.

 

March oil share was 39.16%, while the March soybean crush ended at 80 1/2 cents.