February 13, 2009

 

CBOT Soy Review on Thursday: Slide continued; extracts premium

 

 

Soybean futures at the Chicago Board of Trade stumbled to one-week lows Thursday, settling down for the third consecutive day as the market continued to extract risk premium from prices.

 

CBOT March soybeans finished 9 1/2 cents lower at US$9.68 1/2. March soy meal settled US$1.00 lower at US$304.70 per short tonne. March soyoil finished 35 points lower at 32.83 cents per pound. Weather models showing potential for rains to return to Argentina and southern Brazil late next week coupled with weak outside market influences opened the door for price declines, analysts said.

 

Bearish technical signals amid the inability of the market to generate follow through buying on any upside move shows futures are losing bullishness amid some timely rains in South America, said Mike Zuzolo, analyst with Risk Management Commodities Inc.

 

Lingering economic woes limited buying interest as well, with weakness in crude oil, declines in stock indexes and a firmer U.S. dollar aiding the lower theme, Zuzolo added.

 

However, futures did trade in positive territory for a portion of the day, buoyed by strong export demand, the potential for a farmers strike in Argentina and the uncertainty still surrounding South American crop potential.

 

Meanwhile, bull spreading was featured as well, with traders buying nearby contracts on tighter supply and demand characteristics for old crop futures while selling deferred months on outlooks for increased 2009 U.S. soy acreage, Zuzolo said.

 

Otherwise, activity was subdued and choppy, with traders take a cautious approach in uncertain economic times as well as squaring some early position evening heading toward a 3-day holiday weekend.

 

The T-storm weather forecast said a chance for t-storms returns to Argentina late next week. This potential event will be important if rainfall amounts and coverage on Sunday night and Monday are expectedly low.

 

Meanwhile, Argentina's farm leaders met in Buenos Aires Thursday to decide if they will go on strike to protest high export taxes and limited state help in the face of a severe drought. The leaders of the four big agricultural groups will announce the measures that they will take at a press conference, which is was tentatively scheduled to be held around 6 p.m. local time.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 1,069,200 metric tonnes for the week ended Feb. 5. Sales for 2008-09 were a net 1,068,700 metric tonnes. USDA also announced private exporters reported a daily export sale of 116,000 metric tonnes of Soybeans for delivery to China during the 2008/2009 marketing year

 

 

SOY PRODUCTS

 

Soy product futures ended lower, succumbing to spillover pressure from declines in soybeans. Weakness in crude oil futures added price pressure to soyoil futures, offsetting the supportive influence of solid export demand, analysts say.

 

Soymeal futures ended lower, erasing earlier gains on a late slide in soybean prices. Supportive weekly export sales provided underlying support to limit downside risks, analysts said.

 

March oil share ended at 35.01% and the March crush ended at 63 cents.