February 13, 2010

 

CBOT Soy Review on Friday: Beans settle higher after initial slide

 

 

Chicago Board of Trade soy futures ended modestly higher Friday after rebounding from an early slide on pre-holiday-weekend position evening.

 

CBOT March soy ended 2 cents or 0.21% higher at US$9.45, and May soy settled 2 cents or 0.21% higher at US$9.54.

 

Speculative funds were estimated buyers of 4,000 lots in soy and 1,000 lots in soymeal. Speculative funds were estimated sellers of 2,000 lots in soyoil.

 

The market remains in consolidation mode and once initial losses were deemed overdone, speculative short-covering emerged to lift prices into positive territory, said John Kleist, broker/analyst with Allendale Inc.

 

Futures absorbed some overwhelmingly negative news, but when traders factored in how much of the news would actually impact soy markets, sellers stepped away, allowing prices to recover.

 

A higher U.S. dollar resulting from news that China raised its bank reserve requirements, a move seen possibly slowing the country's economic growth, generated broad-based commodity weakness.

 

However, with trade already anticipating a slowdown in China demand due to South American competition and outlooks for slower activity as Asian markets celebrate the Lunar New Year holiday next week, the impact was muted as the session unfolded, analysts said.

 

Traders were eager to square some positions ahead of the extended holiday weekend, setting the stage for prices to stabilize, said Kleist. The market is still in a consolidative phase, with traders unwilling to aggressively push values in either direction, he added.

 

However, the longer term view remains defensive for prices, as record South American supplies enter the world pipeline in coming weeks.

 

CBOT markets will be closed Sunday evening and for Monday's day session in observance of the Presidents Day holiday. Trading will resume Monday evening.

 

On tap for Tuesday, the National Oilseed Processors Association's report on the January soy crush will be released at 8:30 a.m. EST (1330 GMT).

 

The soy crush rate in the NOPA monthly soy crush report for January is expected to show a decline from the previous month, coming in near 162.03 million bushels, according to a survey of industry analysts.

 

 

Soy Products

 

Soy product futures ended mixed, with soymeal gaining product share on the continued unwinding oil/meal spreads. Soymeal bounced in step with soy, recovering from early declines on pre-weekend position evening.

 

Soyoil futures stumbled, backpedaling on the bearish influence of sharp declines in crude oil futures and news of further delays to the possible reenactment of the US$1 biodiesel tax credit, analysts said. U.S. government legislators failed to include the US$1 biodiesel credit in a jobs bill, meaning there's no incentive for biodiesel plants to come back on line, according to an AgriCharts market note.

 

March soymeal settled US$2.60 or 0.94% higher at US$280.00, while March soyoil dropped 30 points or 0.79% to 37.84 cents a pound.

 

March oil share was 40.35% while the March soy crush ended at 87 1/4 cents.