January 29, 2010
CBOT Soy Review on Thursday: Bounces on month-end profit taking by shorts
Chicago Board of Trade soy futures finished stronger Thursday in a bounce from recent losses and on profit taking by shorts ahead of the end of the month.
March soy ended up 2 3/4 cents, or 0.3%, at US$9.31 3/4 a bushel. The contract bounced after closing Wednesday at its lowest price since Oct. 7.
The market was due for a rebound after sinking since the beginning of the year, analysts said. CBOT March soy are down US$1.16 3/4 so far this month and have lost 78 3/4 cents since the U.S. Department of Agriculture issued a crop report Jan. 12 that raised the forecast for U.S. soy production.
"It makes sense, today and tomorrow, to take profits out of the market," said Tim Hannagan, analyst for PFGBest.
CBOT March soy bounced after hitting a session low of US$9.21, near a technical support level at US$9.20, Hannagan said. Commodity funds bought an estimated 3,000 contracts.
Soy will likely see more short covering Friday, although the market could trade up or down, Hannagan said. The market is still in a seasonal downtrend, he said.
"Everybody's still in the mindset that you have to sell rallies until further notice," Hannagan said.
Expectations for a large crop in South America remain fundamentally bearish for the soy complex, traders said. China, which has been an aggressive buyer of U.S. soy, is expected to shift its purchases to South America from the U.S.
The USDA reported total weekly U.S. soy export sales of 857,100 tonnes, including 673,500 tonnes for the 2009-10 marketing year. That was within trade expectations of 700,000 to 900,000 tonnes.
Soy Products
CBOT soy product futures finished mixed as soymeal bounced with soy. March soymeal is down US$14.50, or 4.9%, since the USDA issued the Jan. 12 crop report.
March soyoil on Thursday ended down 17 points, or 0.5%, at 36.15 cents a pound. March soymeal closed up 30 cents, or 0.1%, at US$281.60 a short tonne.
Commodity funds sold an estimated 1,000 soyoil contracts.
