February 24, 2009

 

CBOT Soy Review on Monday: Climb; technical bounce from oversold levels

 

 

Chicago Board of Trade soybean futures ended higher Monday, experiencing a modest technical bounce from prior lows amid oversold conditions.

 

CBOT March soybeans gained 10 1/4 cents to US$8.72 3/4 a bushel, and May soybeans settled 12 3/4 cents higher at US$8.76.

 

May soy meal settled US$6.10 higher at US$273.30 a short tonne. May soyoil finished 9 points higher at 30.62 cents a pound.

 

The market had oversold futures last week, pricing in more rain for South American crops, but with only adequate showers reported and South American crops at the end of their pod-fill stage, soybean futures found support to attract short-covering, said Tim Hannagan, an analyst at Alaron Trading in Chicago.

 

Private weather forecasters having taken some rain out of Argentina's outlook for this week coupled with forecasts for up to 8 inches of rain in central Brazil during the next six to seven days were bullish features aiding the advances, Hannagan said.

 

Commercial buying beneath the market helped underpin prices as did worries about the potential impact of an Argentine farmers strike on demand, traders said.

 

However, upside momentum was limited by weakness from outside financial markets and lower-than-expected weekly export inspections.

 

Demand signals showing a seasonal trend of soybean purchases by world importers shifting to South America amid the recent stabilization of southern hemisphere crops helped cap upside price action, Hannagan said.

 

U.S. soybeans inspected for export in the week ended Feb. 19 totaled 27.490 million bushels, down 43.4% from the previous week's 48.550 million. The primary destination for the soybeans was China, which accounted for 21.286 million bushels.

 

The DTN Meteorlogix Weather forecast said a few dry days for northern Brazil crop areas have been favorable to the progress of the soybean harvest. However, rain activity will pick up this week and will threaten further progress. Brazil's largest soybean-growing state, Mato Grosso, is forecast to receive from 2 to 4 inches of rain this week.

 

Meanwhile, with Argentina farmers on strike and tensions high ahead of talks with the government, Argentines worry whether they are watching a repeat of last year's crippling conflict.

 

There are disturbing similarities between the current standoff and last year, when a battle over export taxes spurred farmers to launch a series of nationwide strikes and roadblocks over a four-month period that shut down grain and beef exports, caused food shortages in the cities and halted road transport.

 

 

SOY PRODUCTS

 

Soy product futures ended higher Monday, recovering from prior losses in unison with soybeans. Soymeal futures made strong strides to higher levels, staging a relief rally after losses in prior weeks. Soyoil futures ended modestly higher, feeding off the supportive tonnee flowing through the complex, but borrowed weakness from crude oil managed to cap upside momentum, analysts said.

 

May oil share ended at 35.91% and the May crush ended at 62 cents.