February 11, 2010

 

CBOT Soy Review on Wednesday: Beans bounce on short-covering, end-user buying

 

 

Soy futures at the Chicago Board of Trade finished higher Wednesday, bouncing on a combination of speculative short-covering and end-user buying.

 

CBOT March soy ended 13 cents, or 1.41%, higher at US$9.37 1/2, and May soy settled 11 3/4 cents, or 1.26%, higher at US$9.47.

 

Speculative funds were estimated buyers of 6,000 lots in soy and 2,000 lots in soymeal. Speculative funds were estimated sellers of 1,000 lots in soyoil.

 

Oversold market conditions and continuing commercial demand underpinned the market.

 

Tight cash basis levels amid a lack of farmer selling and decent export demand have led to the most bullish commercial position in the market since October, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, South Dakota.

 

End users have been taking coverage in the market on price breaks, allowing futures to hold support at recent lows.

 

Futures have settled into in a consolidative mode, with an absence of fresh news promoting a choppy theme. Strong technical support at the US$9.00 level serves as a near-term bottom for prices, while South American hedge pressure is seen limiting advances near the US$9.40 level, analysts said.

 

The absence of outside macro market pressure as the session unfolded allowed prices to bounce as well. However, the longer range seasonal trend remains lower, as record projected South American crops continue to loom over the market.

 

The U.S. Department of Agriculture said Wednesday it won't release its weekly export sales data on Thursday because of the snowstorm that has closed the U.S. federal government this week. USDA didn't say when the data will be released.

 

 

Soy Products

 

Soy product futures settled mixed, with the unwinding of oil/meal spreads featured attractions. Soymeal recovered from Tuesday's setback, underpinned by firm cash basis levels, end user buying and technical strength from the market's inability to breach support at Tuesday's lows, analysts said.

 

Soyoil futures ended the session with modest declines, pressured by profit taking on oil/meal spreads. Optimistic outlooks for a pickup in soyoil use for biodiesel and spillover support from a recovery in crude oil futures from early declines helped limit losses, analysts said.

 

March soymeal settled at US$5.80 or 2.14% higher at US$276.40. March soyoil dropped 11 points or 0.29% to 38.27 cents per pound.

 

March oil share was 40.95% while the March soy crush ended at 91 1/2 cents.