February 7, 2009

 

CBOT Soy Review on Friday: Extends recovery; bullish weather outlooks

 

 

Chicago Board of Trade soybean futures rallied Friday, continuing their recovery bounce from early week lows, buoyed by bullish forecasts for Argentina crops.

 

CBOT March soybeans finished 21 cents higher at US$10.01. March soymeal settled US$9.30 higher at US$317.30 per short tonne. March soyoil finished 35 points higher at 33.40 cents per pound.

 

In pit trades, speculative fund buying in soybeans was estimated at 4,000 lots.

 

Forecasts for a return of hot/dry weather conditions in Argentina next week enticed traders into adding risk premium back into prices, analysts said. Traders were encouraged by bullish arguments stating that the U.S. will need to make up the likely output shortfall in the Southern Hemisphere.

 

The market remains in a volatile state, bouncing on weather issues, and with Argentina crops in the critical pod-filling stage of development, the market is very sensitive to the potential for yield losses, analysts said.

 

Futures rallied to their highest point in nearly two weeks, and technical traders were encouraged by active contracts' ability to settle above the psychological US$10.00- per-bushel level.

 

Added support was derived from outlooks for tighter U.S. ending stock projections and an expected reduction in South American production when the U.S. Department of Agriculture releases its February supply-and-demand report Tuesday. Nevertheless, profit-taking and end-of-the-week position squaring applied mild pressure to trim advances, analysts added.

 

Looking ahead, traders will eye weekend forecasts for direction for Sunday evening's resumption of trade.

 

The DTN Meteorlogix Weather forecast said Argentina's central crop belts are turning hotter and drier again. No rain is expected in the next 10 days, increasing stress on the soybean crop, Meteorlogix said.

 

 

SOY PRODUCTS

 

Soy product futures followed soybeans higher, with buyers energized by concerns for Argentina crops amid stressful weather conditions forecast for next week.

 

Soymeal moved in unison with soybeans, as world soymeal supplies are more dependent on soybean supplies, particularly with meal equivalent on the global stage, analysts said.

 

Soyoil futures ended higher, but lost product share on spreads. Corrections in the meal/oil spread relationship coupled with weakness in crude oil limited soyoil's upside potential, analysts said.

 

March oil share ended at 34.48% and the March crush ended at 64 1/2 cents.