January 27, 2010

 

CBOT Soy Review on Tuesday: Higher; stage modest recovery from recent lows

 

 

Soy futures on the Chicago Board of Trade settled higher Tuesday, staging a modest recovery from recent declines on speculative buying.

 

CBOT March soy ended 7 cents, or 0.74%, higher at US$9.47 1/2, and May soy settled 7 1/2 cents or 0.79% higher at US$9.57.

 

Speculative funds were estimated buyers of 5,000 lots in soy, 1,000 lots in soymeal and 1,000 lots in soyoil.

 

The market managed to bounce higher after selling interest was exhausted amid trader ideas that recent losses were overdone in the near term. The market can't go down every day on the same news, as it will eventually have some reaction, said Sid Love of Kropf and Love Consulting. The market finally experienced an adjustment in the bean market after traders pounded the market over the last few weeks, he added.

 

Futures initially slid to new 3 1/2-week lows, following through on overnight declines. But once outside markets showed some stability, futures managed to find some price strength.

 

Underlying concerns about heat and drier conditions in Argentina provided mild support, with the unwinding of some soy/corn spreads helping underpin prices as well.

 

The market was a bit oversold for the short term, opening the door for speculative short covering to emerge following a 3 1/2-week downturn, traders said.

 

Otherwise, the market lacked new directives, with a modest technical recovery enough of a feature to override weakness from a firmer U.S. dollar and concerns about signs of further monetary tightening in China.

 

Nevertheless, analysts said the market remains in a defensive posture, with record crop prospects for South America continuing to loom large over the market, a CBOT floor analyst said.

 

The DTN Meteorlogix weather forecast said hot and dry conditions will continue in Argentina crop areas through Friday, with little chance of significant rainfall. Highs will reach well into the 90s Fahrenheit and possibly the low 100s Fahrenheit. The conditions during this weekend and next week do not look as severe as there is at least some chance of showers and less very hot weather, Meteorlogix said.

 

 

Soy Products

 

Soy product futures ended higher, recovering from recent setbacks in unison with soy. Speculative short covering was a featured attraction, serving as the catalyst for the bounce in both soymeal and soyoil, analysts said. The markets kept pace with soy in otherwise subdued trading activity.

 

March soymeal settled at US$4.40 or 1.55% higher at US$287.40. March soyoil rose 27 points or 0.74% to 36.77 cents per pound.

 

March oil share was 39.04% while the March soy crush ended at 89 1/4 cents.