February 12, 2010

 

CBOT Soy Review on Thursday: Firm cash, technical buys buoy soy, soymeal

 

 

Firm cash prices and technical buying combined to buoy Chicago Board of Trade soy futures to a higher close Thursday.

 

CBOT March soy ended 5 1/2 cents, or 0.59%, higher at US$9.43, and May soy settled 5 cents, or 0.53%, higher at US$9.52.

 

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

 

Tightening cash basis levels served as a catalyst to entice traders into lifting futures prices in an effort to entice farmers into freeing up some supplies into the spot market, analysts said.

 

Processors are bidding up prices to secure inventory needs and exporters are attempting to attract farmer sales for export demand.

 

News that commercial firms canceled 143 contracts registered for delivery at the CME Group on Wednesday was a reflection of near-term commercial needs, analysts said.

 

The firm cash prices underpinned futures but failed to ignite a sharp price bounce. "There's not a shortage of soy supplies, just a lack of spot market inventories due to cold, snowy conditions stifling transportation," a CBOT floor analyst said.

 

Technical buying helped support the higher theme, with bullish traders encouraged by the market's ability to climb above near-term chart resistance at the US$9.40 level, basis March futures. Oversold market conditions following the sharp slide in prices from the past month continue to attract light short covering and fresh speculative buying on assumptions a near-term bottom is in place.

 

However, the longer-term outlook remains lower, with record large crop projections for South American production expected to limit any upside rallies.

 

The U.S. Department of Agriculture released on Thursday its long-term baseline projections compiled in November 2009, and pegged 2010 soy planted acres at 76.5 million and harvested acres at 75.5 million. Projected ending stocks for the 2010-11 marketing year were forecast at 354 million bushels.

 

USDA is scheduled to release its weekly export sales report at 8:30 a.m. EST Friday. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Feb. 4 to be in the range of 300,000 to 600,000 metric tonnes. Soymeal export sales are seen between 100,000 and 200,000 tonnes, while soyoil sales are pegged between 10,000 and 30,000 tonnes.

 

 

Soy Products

 

Soymeal futures ended higher with soy, buoyed by firm cash market prices. Tight nearby cash market supplies as a result of slow soy movement are bolstering prices as processors bid up prices in an attempt to entice farmer selling of cash soy, analysts said.

 

Soyoil futures ended lower, continuing to retreat from prior gains on the unwinding of oil/meal spreads. Profit-taking on oil share trades was featured, with adjustments in the meal/oil spread relationship overshadowing spillover support from higher crude oil futures, analysts said.

 

March soymeal settled US$1.00, or 0.36%, higher at US$277.40. March soyoil dropped 13 points, or 0.34%, to 38.14 cents per pound.

 

March oil share was 40.82% while the March soy crush ended at 86 3/4 cents.