February 18, 2010

 

CBOT Soy Review on Wednesday: Retreat in consolidative setback

 

 

Chicago Board of Trade soy futures ended lower Wednesday, posting losses on a consolidative correction from recent gains.

 

CBOT March soy ended 14 cents, or 1.45%, lower at US$9.51 1/2, and May soy settled 13 1/2 cents, or 1.39%, lower at US$9.61.

 

Speculative funds were estimated sellers of 5,000 lots in soy, 2,000 lots in soymeal and 3,000 lots in soyoil.

 

Tuesday's spike in prices was mostly short-covering, and without the bullish influence of outside markets, traders looked to book profits on prior gains, said John Kleist, broker/analyst at Allendale Inc.

 

Trader ideas that Tuesday's gains were overdone set the stage for the setback, with overbought short-term technical indicators opening the door for a minor technical correction.

 

In the absence of outside market support, bearish fundamentals cast a negative cloud over prices, with favorable South American crop conditions continuing to promote record crop potential.

 

"The market needs fresh supportive news to keep fuel on market bull's fire, particularly without the support of outside markets," said Kleist.

 

Meanwhile, light support was generated from a solid monthly crush figure, but not enough to inspire buying after prices had rallied over 49 cents since Feb. 4.

 

The National Oilseed Processors Association said 162.397 million bushels of soy were crushed in January. That's down from 164.4 million in December, but slightly higher than the average analyst estimate of 162.03 million.

 

U.S. Department of Agriculture's weekly export sales report, normally released on Thursday, will be postponed until 8:30 a.m. EST Friday due to Monday's Presidents Day holiday.

 

 

Soy Products

 

Soy product futures settled lower, retreating with soy from prior gains on a mild corrective setback. The bearish influence of a firmer U.S. dollar and the threat of increased South American competition once Brazil and Argentina crops are harvested weighed on prices, analysts said. Technical selling was featured, with soyoil managing to gain some product share value as traders adjust the meal/oil spread relationship.

 

March soymeal settled US$4.50, or 1.59%, lower at US$279.40, and the May contract dropped US$4.10, or 1.47%, to US$274.20 per short tonne. March soyoil slid 20 points, or 0.51%, to 38.75 cents per pound, while the May contract settled 20 points, or 0.51%, lower at 39.23.

 

May oil share was 41.71%, while the May soy crush ended at 73 3/4 cents.