January 22, 2010

 

CBOT Soy Review on Thursday: End up; consolidates after recent slide

 

 

Soy futures on the Chicago Board of Trade ended higher Thursday, managing to consolidate after stumbling in nine out of the last 10 trading days.

 

CBOT March soy ended 4 cents or 0.32% higher at US$9.54, and May soy settled 4 1/4 cents or 0.37% higher at US$9.61.

 

Speculative funds were estimated buyers of 3,000 lots in soy, 1,000 lots in soymeal and 2,000 lots in soyoil.

 

The market was a bit oversold for the short term, opening the door for speculative short covering to emerge following a 2 1/2-week downturn, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

The market seemingly found some value at current levels, with end user buying adding to the supportive mix, Scoville said.

 

News of fresh export sales to China at a time when most participants were expecting the nation to cool its demand added support as well.

 

The U.S. Department of Agriculture announced Thursday that private exporters reported export sales of 230,000 metric tonnes of soy for delivery to China. Of the total, 175,000 metric tonnes is for delivery during the 2010/2011 marketing year and 55,000 metric tonnes is for delivery during the 2009/2010 marketing year, the USDA said.

 

Otherwise, the market lacked new directives, with the technical recovery enough of a feature to override weakness from a firmer U.S. dollar and lower crude oil and metal futures.

 

Nevertheless, "the longer-term view of the market remains bearish, with the large scope of upcoming South American supplies increasingly suggesting a precipitous decline in exports beginning in the spring," according to a J.P. Morgan research note. "In addition, relatively strong pricing, combined with the fact that soy are likely to enjoy significant additional planting interest from land unused for winter wheat, suggest the market is in danger of encouraging a large year-over-year increase in U.S. production just as global fundamentals are becoming increasingly weak," the J.P. Morgan note said.

 

The USDA is scheduled to release its weekly export sales report at 8:30 a.m. EST Friday. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Jan. 14 to be in the range of 700,000 to 1,000,000 metric tonnes. Soymeal export sales are seen between 150,000 and 300,000 tonnes, while soyoil sales are pegged between 10,000 and 20,000 tonnes.

 

 

Soy Products

 

Soy product futures ended higher, rising in a recovery from prior losses. Speculative short covering were featured attractions in the products, with traders viewing the gains as more downside exhaustion than a change in fundamental outlooks, analysts said. Otherwise, the markets followed soy, with corrective adjustments in the meal/oil spread relationship helping soyoil gain some product share value.

 

March soymeal settled at US$1.30 or 0.45% higher at US$287.50. March soyoil climbed 43 points or 1.2% to 37.00 cents per pound.

 

March oil share was 39.05% while the March soy crush ended at 85 1/2 cents.