February 10, 2009

 

CBOT Soy Review on Monday: Edge up; crop concerns, demand underpin

 

 

Chicago Board of Trade soybean futures ended Monday's session posting modest gains, edging higher despite two-sided action, as the uncertainty surrounding South American crops buoyed prices.

 

CBOT March soybeans finished 1 cent higher at US$10.02. March soy meal settled US$3.50 lower at US$313.80 per short tonne. March soyoil finished 83 points higher at 34.23 cents per pound.

 

Lingering fears of Argentina dryness further reducing soybean yield potential coupled with outlooks for U.S. Department of Agriculture to tighten domestic and global soybean balance sheets supported prices, analysts said.

 

However, after setting a new swing high for the current upward move, futures encountered profit taking pressure, as talk of recent rains stabilizing some of Argentina's crops attracted sellers, said John Kleist, broker/analyst at Allendale Inc.

 

The market remains reluctant to go to levels that will trigger hefty cash sales, Kleist said. A lot of cash sales are waiting in the US$10.50 to US$10.60 price range, Kleist added.

 

Evening of positions ahead of Tuesday's supply and demand report, coupled with spillover weakness from soymeal, provided additional selling to briefly drop futures below the psychological US$10 level, traders said.

 

However, downside pressure failed to garner enough momentum to keep prices pinned in negative territory. Outlooks for smaller South American crops and solid underlying export demand remain fundamental constants to support prices, traders said.

 

The DTN Meteorlogix Weather forecast said that by the middle of the week, dry conditions return to Argentina, and by the end of the week, temperatures are going to be very hot again. No rain is expected until the middle of next week at the earliest, Meteorlogix said.

 

Private exporters reported the sale of 120,000 metric tonnes of soybeans for delivery to China during the 2008/2009 marketing year, the USDA said Monday.

 

U.S. soybeans inspected for export in the week ended Feb. 5 totaled 46.567 million bushels, up 22% from the previous week. The primary destination for the soybeans was China, which accounted for 33.184 million bushels. Accumulated soybean export inspections for the 2008-09 marketing year total 713.805 million bushels, up 12.9% from the 632.485 million reported at the same time last year.

 

On tap for Tuesday, USDA is scheduled to release its February supply and demand report Tuesday 8:30 a.m. EST. Analysts surveyed by Dow Jones Newswires anticipate a downward revision in South American production and a tighter U.S. balance sheet.

 

The average of trade guesses from the 14 analysts surveyed by Dow Jones Newswires peg 2008-09 estimated U.S. ending stocks at 203 million bushels, a 22 million bushel reduction from January's forecast. The estimates ranged from 123 million bushels to 230 million bushels.

 

 

Soy Products

 

Soy product futures ended mixed Monday. Soyoil futures emerged as the strongest link in the soy complex, fueled by a correction in the meal/oil spread relationship. Soyoil is in recovery mode from recent setbacks, with stabilizing energy prices lending support to the market.

 

Soymeal stumbled, consolidating from recent gains on lagging demand and uncertainty surrounding Argentina crops, analysts said.

 

March oil share ended at 35.29% and the March crush ended at 65 cents.

 

In pit trades, speculative funds were estimated buyers of 2,000 lots.