February 10, 2010

 

CBOT Soy Review on Tuesday: Beans slip on hedge sales, crop outlooks

 

 

Chicago Board of Trade soy futures ended lower Tuesday, succumbing to hedge-related selling and bearish supply outlooks, after spending most of the day trading sideways.

 

CBOT March soy ended 5 cents, or 0.54%, lower at US$9.29 1/2, and May soy settled 4 3/4 cents, or 0.51%, lower at US$9.35 1/4.

 

Speculative funds were estimated sellers of 6,000 lots in soy and 2,000 lots in soymeal. Speculative funds were estimated buyers of 3,000 lots in soyoil.

 

The market settled into a consolidation mode, unable to build on early advances following supportive U.S. balance sheet adjustments from U.S. Department of Agriculture.

 

Futures saw short-covering ahead of USDA's supply and demand estimates on anticipation of tighter U.S. stocks.

 

However, the report failed to produce any real surprises. With a growing South American crop seen large enough to offset any U.S. supply tightness, there was nothing to change the seasonal trading pattern of the market, said Tim Hannagan, analyst with P.F.G. Best in Chicago.

 

Participants took the opportunity to even up positions built in anticipation of the report, with support from the domestic balance sheet offset by bearish longer range world-supply fundamentals, he added.

 

Long-range supply bearishness associated with South American production encouraged farmer and commercial selling on price gains amid seasonal weakness.

 

The USDA projected 2009-10 soy ending stocks of 210 million bushels, down 35 million from the January estimate of 245 million. Analysts on average estimated ending stocks of 219 million bushels. Soy exports were raised 25 million bushels to 1.400 billion, and soy crush was raised 10 million bushels to 1.720 billion.

 

The USDA projected soy production for Brazil at 66 million tonnes, up 1 million tonnes from last month due to higher yields.

 

Meanwhile, the agricultural survey group of Brazil's Census Bureau, the IBGE, put the new 2009-10 soy crop at 66.1 million metric tonnes. The new estimate compares with IBGE's estimate on Jan. 7 of 65.2 million metric tonnes for 2009-10.

 

 

Soy Products

 

Soyoil futures shook off the bearishness in the soy complex Tuesday, rallying to 3 1/2 week highs. The combination of spillover support from strong gains in crude oil futures and meal/oil spread unwinding served as catalysts for the gains, analysts said. Bullish long-range soyoil usage outlooks for biodiesel and the potential for less soymeal feed usage as temperatures warm in the spring, helped lift soyoil product share value, analysts said.

 

Soymeal futures stumbled with soy, retreating after a choppy session with adjustments in the meal/oil spread relationship seen.

 

March soymeal settled at US$3.80, or 1.38%, lower at US$270.60. March soyoil gained 43 points, or 1.13%, to 38.38 cents a pound.

 

March oil share was 41.56%, while the March soy crush ended at 93 cents.