February 4, 2010

 

CBOT Soy Review on Thursday: End on lows; fundamentals rekindle selling

 

 

Chicago Board of Trade soy futures tumbled Wednesday, retracing Tuesday's advances after a lack of follow-through buying and bearish fundamental outlooks combined to rekindle selling interest.

 

The market finished at session lows, with declines accelerating after futures challenged recent lows.

 

CBOT March soy ended 17 1/2 cents, or 1.9%, lower at US$9.08, and May soy settled 17 1/2 cents, or 1.87%, lower at US$9.19.

 

Speculative funds were estimated sellers of 5,000 lots in soy, 1,000 lots in soymeal, and 2,000 lots in soyoil.

 

The market's inability to follow through on Tuesday's gains disappointed bulls, with concerns about rising world soy supplies as South America prepares to harvest record crops casting a cloud over the market, analysts said.

 

A firmer U.S. dollar in conjunction with weakness in crude oil and metal futures provided psychological pressure to keep buyers on the sidelines as well, analysts added.

 

The absence of speculative fund buying that buoyed futures Tuesday opened the door for the setback, with rising private South American production estimates sparse and fresh export demand adding to an already bearish theme in the market.

 

However, bullish traders were encouraged by the market's ability to hold above recent lows, a possible signal that futures have found some value and are ready to consolidate, a CBOT floor analyst said.

 

Private analytical firm Informa Economics said Wednesday it expects bigger South American soy crops than it did last month. The firm pegged Brazil's soy crop at 66.5 million tonnes, up 500,000 tonnes from its estimate last month, traders said. It estimated Argentina's soy crop at 54 million tonnes, up 1 million tonnes from last month, it said.

 

The U.S. Department of Agriculture last month estimated Brazil's soy crop at 65 million tonnes and Argentina's crop at 53 million.

 

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. 28 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 stumbled in unison with soy. The market backpedaled from Tuesday's advances, with sellers gaining momentum as follow through buying failed to surface. A firmer U.S. dollar and broad based commodity weakness added to the defensive tonnee, with fears of increased competition from record South American crops helped pin price sin negative territory.

 

March soymeal settled at US$4.70, or 1.72%, lower at US$268.90. March soyoil dropped 57 points, or 1.52%, to 36.90 cents per pound.

 

March oil share was 40.88% while the March soy crush ended at 89 1/2 cents.