February 5, 2010

 

CBOT Soy Review on Thursday: Rallies late on short-covering bounce; ends up

 

 

Chicago Board of Trade soy futures finished stronger Thursday in a late-session bounce from earlier losses on profit-taking by shorts after futures held underlying support levels.

 

The market finished at session highs, with advances accelerating on preplaced buy orders after futures climbed back above unchanged levels.

 

CBOT March soy ended six cents, or 0.66%, higher at US$9.14, and May soy settled 5 3/4 cents, or 0.63%, higher at US$9.24 3/4.

 

Speculative funds were estimated buyers of 5,000 lots in soy, 1,000 lots in soymeal, and 3,000 lots in soyoil.

 

Technically inspired buying served as the catalyst for the late recovery, with oversold conditions and the ability of the most active March contract to hold support at the psychological US$9.00 level attracting buyers, analysts said.

 

Traders were encouraged by the market's strength in the face of bearish outside market influences. The U.S. dollar index surged Thursday, with crude oil, metals and equity futures all tumbling.

 

A firm dollar reduces traders' appetite for risk and makes U.S. commodities less attractive to foreign buyers, analysts said.

 

After falling to four-month lows in a month-long downtrend, futures managed to consolidate despite the macro market pressure, a sign that futures are finding value as traders show hesitancy in extending losses at key support levels, a CBOT floor analyst said.

 

Despite the late rise in prices, traders are expected to remain cautious of upside movement, as record South American production and slowing export demand are seen limiting upward potential.

 

 

Soy Products

 

Soyoil futures ended higher, feeding off bullish optimism for usage for biodiesel following Wednesday's EPA biofuels decision. Traders were optimistic of increased use and higher product-share values, with a higher-than-expected weekly export sales report adding strength as well, analysts said. However, the underlying uncertainties of the EPA decision on biofuel mandates and an upwardly revised Census Dec stocks figure applied light pressure to cap advances.

 

Soymeal futures settled higher, staging a late-session bounce with soy on speculative short covering.

 

March soymeal settled at US$2.30, or 0.86%, higher at US$271.20. March soyoil settled up 31 points, or 0.84%, at 37.21 cents a pound. March oil share was 40.63%, while the March soy crush ended at 92 cents.