February 17, 2010

 

CBOT Soy Review on Tuesday: Rally on outside markets, short covering

 

 

Chicago Board of Trade soy futures settled higher for the fourth consecutive trading day Tuesday, rallying to 4-week highs on speculative short-covering and outside market support.

 

CBOT March soy ended 20 1/2 cents, or 2.17%, higher at US$9.65 1/2, and May soy settled 20 1/2 cents, or 2.15%, higher at US$9.74 1/2.

 

Speculative funds were estimated buyers of 7,000 lots in soy, 2,000 lots in soymeal, and 3,000 lots in soyoil.

 

The session's gains were more technical in nature, with upside movement gaining momentum after futures spiked above last week's highs, said Brian Hoops, president Midwest Market Solutions in Yanktonne, South Dakota.

 

Speculative funds came into the week short, and looked to get out of some of those positions on follow through buying from last week and the overnight session.

 

Supportive outside market influences, with a lower U.S. dollar and sharp gains in crude oil and metal futures lead to additional buying interest, Hoops said.

 

The absence of fresh news kept attention on movements in outside markets, but another solid week of export inspections continued to provide demand support for prices.

 

Asian and South American markets were closed due to Lunar New Year and Carnival celebrations, respectively.

 

Otherwise, seasonal buying was featured, with buyers gaining confidence on the market's ability to extend its recovery, a sign of a possible near term bottom is in place, a CBOT floor analyst said.

 

U.S. Department of Agriculture reported soy inspected for export in the week ended Feb. 11 totaled 38.055 million bushels. Analysts surveyed by Dow Jones anticipated inspections in a range of 32 million to 45 million bushels. The primary destination was China at 22.430 million bushels.

 

National Oilseed Processors Association's January soy crush report, scheduled for release Tuesday after 8:30 a.m. EST, was delayed until Wednesday due to inclement weather conditions. The soy crush rate 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

 

Soyoil futures spiked to 1-month highs Tuesday, soaring on spillover support from surging crude oil futures. Bullish outside market influences was the dominant factor in the market, with a corrective adjustment in the meal/oil spread relationship adding to the bullish tonnee.

 

Soymeal futures climbed to 3-week highs, feeding on the bullish momentum filtering through the complex. Supportive outside influences and technical strength underpinned prices, but rekindled soyoil/soymeal spreading kept a lid on advances, analysts said.

 

March soymeal settled US$3.90, or 2.93%, higher at US$280.00, and the May contract rose US$4.10, or 1.50%, at US$278.30 per short tonne. March soyoil climbed 111 points, or 1.39%, to 38.95 cents per pound, while the May contract settled 111 points, or 2.90%, higher at 39.43.

 

May oil share was 41.49% while the May soy crush ended at 71 1/2 cents.