February 5, 2009

 

CBOT Soy Review on Wednesday: Modest gains hold, despite wet Argentina

 

 

Chicago Board of Trade soybean futures rose Wednesday, but bearish Argentine forecasts weakened the pace indicated by opening trades nearly 20 cents over the close.

 

March soybean contracts finished up 3 1/2 cents a bushel to close at US$9.49 1/2, off the day's US$9.68 high. The contract traded a 24-cent range. May soybeans also added 3 1/2 cents to close at US$9.53 3/4. It spread a 19 1/2-cent range, topping at US$9.69 1/2.

 

Midday estimates pegged speculative fund trading as even in soybean and soymeal contracts. Fund soyoil purchases were pegged at 2,000 contracts.

 

"We saw probably a bit of a technical correction today - an attempt to bounce, but the noon weather model and talk that Argentina had additional areas replanted pressured prices," said Anne Frick, an oilseed analyst at Prudential Bache. "That's what took us down after being higher overnight."

 

She said new crop prices are again being pressured by an improved South American crop outlook.

 

And, Frick added, "soybean meal's relative weakness in new relative to old crop reflects improvements in [the crop weather in] Argentina."

 

A CBOT floor trader confirmed Frick's analysis, noting estimates of total rainfall increased for Argentine soybean-growing areas broke down the upside momentum that defined the day's earlier trades.

 

"The setup remains favorable for heavy t-storms tonneight with 0.75-1.5 inches in far southern Cordoba, San Luis, La Pampa and western/central Buenos Aires," said meteorologist Mike Tannura of T-Storm Weather.

 

 

Soy Products

 

The CBOT soy complex finished mixed Wednesday.

 

March soymeal is down US$1.80 at US$300 per short tonne. March soyoil is 82 points higher at 32.35 cents per pound.

 

Soyoil's strength "reflects gains in palm oil and probably is basically a reversal in the oil-meal spreads," Frick said.

 

The December-March spread finished at a US$2.50 inverse, a relationship that will probably hold true given the circumstances now facing the March-May spread, the trader added.