February 25, 2010

 

CBOT Soy Review on Wednesday: Closes higher after choppy, two-sided trade

 

 

Soy futures on the Chicago Board of Trade ended a choppy, two-sided session higher Wednesday, rising late on end-of-the-day position evening.

 

CBOT March soy ended 3 cents or 0.32% higher at US$9.55 1/2, and May soy settled 3 1/2 cents or 0.36% higher at US$9.63.

 

The market's upside movement was supported by weakness in the U.S. dollar, firm crude oil futures and concerns about tight nearby cash supplies, analysts said.

 

Solid underlying demand continued to keep a floor beneath prices, with the announcement of the cancellation of another 33 deliverable CBOT soy receipts adding fundamental strength to the market.

 

The cancelled receipts were seen as a bullish signal of tight available nearby supplies and the potential for very limited deliveries against the March contract on Friday.

 

Slow farmer sales and reports of China returning to the global market place to buy two cargoes of soy from South American origins helped underpin prices as well. Despite the sale originating in South America, it's a sign that China has returned to the global market place after its absence for the Lunar New Year celebrations.

 

The market stumbled at midday, succumbing to South American hedge pressure, with profit taking on some old/new crop bull spreads weighing on prices. However, a quiet news front and exhaustion of hedge selling late in the session encouraged traders into covering some positions heading down the stretch.

 

Speculative funds were estimated buyers of 5,000 lots in soy, and 3,000 lots in soyoil. Speculative funds were estimated sellers of 2,000 lots in soymeal. Fund activity is a measure of investment money flow in the market.

 

On tap for Thursday, the Census Bureau's January crush report is scheduled for release at 8 a.m. EST (1300 GMT). U.S. Census Bureau is expected to estimate the January soy crush at 170.2 million bushels, down from the prior month, but still representing strong daily crush rates amid solid soymeal demand, according to a survey of industry analysts.

 

The U.S. Department of Agriculture's weekly export sales report will be released Thursday at 8:30 a.m. EST. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Feb. 18 to be in the range of 200,000 to 350,000 metric tonnes. Soymeal export sales are seen between 100,000 and 175,000 tonnes, while soyoil sales are pegged between 10,000 and 20,000 tonnes.

 

 

Soy Products

 

Soy product futures ended mixed, with soyoil spiking on the bullish influence of crude oil futures and adjustments in the meal/oil spread relationship. The domestic cash soyoil market is now closely linked to energy prices, as more than 10% of all US soy oil is turned into bio-diesel fuel, analysts said.

 

Soymeal futures ended lower, succumbing to commercial hedge selling and weakness attributed to investors taking profits on recent strength in meal/oil spreads.

 

March soymeal settled US$2.70 or 0.97% lower at US$276.90, and the May contract dropped US$1.70 or 0.62% to US$272.20 per short tonne. March soyoil gained 74 points or 1.93% to 39.05 cents per pound, while the May contract settled 72 points or 1.86% higher at 39.50.

 

May oil share was 41.86% while the May soy crush ended at 70 1/4 cents.