February 2, 2010

 

CBOT Soy Review on Monday: Stumbles late, sinks near 4-month lows

 

 

Chicago Board of Trade soy futures stumbled Monday, retreating from previous gains down the stretch, as a lack of fresh supportive news failed to sustain an early short-covering bounce.

 

CBOT March soy ended 4 1/4 cents, or 0.47%, lower at US$9.09 3/4, and May soy settled 4 cents, or 0.43%, lower at US$9.20 3/4.

 

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

 

The absence of fresh fundamental news to inspire buying on rallies attracted sellers, pushing down prices near 4-month lows.

 

The combination of growing global supplies and the threat of decreasing demand for U.S. supplies from China remained bearish features overshadowing support from advances sponsored by a weaker U.S. dollar, analysts said.

 

China's demand focus usually begins to shift to South America as their harvest starts.

 

Prices initially bounced on support from outside markets and traders taking profits on previously sold positions amid ideas that the market was oversold and was due for a correction. Activity was light throughout, with bullish traders disappointed with the market's inability to find buyers after dropping more than US$1.30 a bushel in January.

 

After the beating that prices took in the past month, futures are near levels that may provide some consolidation near the US$9.00 level basis the March contract, said John Kleist, broker/analyst with Allendale Inc.

 

"The market has absorbed most of the bearish news from record south American crops and shifting Chinese demand, but without any overtly bullish news, buyers are unwilling to produce anything more than a light bounce in a bear market," Kleist added.

 

The T-storm Weather forecast said upper-level high pressure across southern Brazil leads to a heat wave for Paraguay, southern Brazil and adjacent areas. The combination of dryness and warmth over the last 10 days and heat and dryness over the next five to seven days continues our conclusion that filling crops will be stressed in Paraguay and southern Brazil, T-storm Weather said. Further north, key areas of central and western Brazil will experience an early start to harvesting due to drying.

 

However, heat in Brazil provides necessary fuel for widespread and heavy rain in Argentina this week. The coming pattern breaks down this weekend and or early next week, which allows for cooling and thunderstorms to return to Paraguay and southern Brazil, T-storm Weather forecasts.

 

 

Soy Products

 

Soy product futures ended mixed, with the unwinding of short soyoil/long soymeal spreads a featured attraction. Soymeal futures stumbled with soy, backpedaling after initial gains failed to attract follow-through buying and weakening cash basis levels, traders said. Soyoil futures withstood the late weakness in the rest of the soy complex, garnering support from higher crude oil futures, analysts said.

 

March soymeal settled at US$2.00 or 0.73% lower at US$271.80. March soyoil rose 4 points or 0.11% to 36.19 cents a pound.

 

March oil share was 40% while the March soy crush ended at 86 1/4 cents.