February 26, 2009

 

CBOT Soy Review on Wednesday: Beans end off lows on short covering, soyoil

 

 

Chicago Board of Trade soybean futures ended Wednesday's session posting modest declines, bouncing off earlier losses on short covering amid borrowed strength from soyoil, analysts said.

 

CBOT March soybeans dropped 3 cents to US$8.78, and May soybeans settled 3 1/2 cents lower at US$8.80.

 

May soymeal settled US$7.60 lower at US$267.40 per short tonne. May soyoil finished 140 points higher at 32.20 cents per pound.

 

Short covering was featured in the market's rebound off intraday lows, fueled by strong gains in soyoil, spillover support from neighboring grains and positive momentum from stock indexes' ability to propel off early losses down the stretch, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

Futures initially stumbled, succumbing to pressure from reports of China canceling some previously purchased U.S. supplies and economic woes attributed to falling stock indexes, analysts said.

 

Additional pressure was absorbed from weakness in the cash market, traders said. The U.S. Department of Agriculture said spot CIF soybean basis fell by as much as 2 cents per bushel in the Louisiana Gulf market in morning activity, placing premiums six to 10 cents below where they were as recently as Friday.

 

As the day unfolded, however, futures found their footing, gaining support from a turnaround in corn and wheat, a strong push higher in soyoil, and optimism for the economy based off stabilizing equity markets late in the day.

 

Soyoil's surge was energized by advances in crude oil and the liquidation of meal/oil spreads.

 

Looking ahead, traders will eye news from USDA's Outlook Forum Thursday and Friday, as they try and get an idea of what the USDA in thinking regarding 2009 acreage, analysts said.

 

On tap Thursday, the U.S. Census Bureau is scheduled to release its January crush report at 8 a.m. EST (1300 GMT). The bureau is expected to estimate the January soybean crush at 145.6 million bushels, up from the previous month amid increased meal export demand.

 

USDA's weekly export sales report will be released at 8:30 a.m. EST on Thursday. Analysts surveyed by Dow Jones Newswires estimate soybean sales for the week ended Feb. 19 in a range of 350,000 to 1 million metric tonnes. Soymeal export sales are seen between 75,000 and 175,000 tonnes, while soyoil sales are pegged between 10,000 and 20,000 tonnes.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with the unwinding of meal/oil spreads a featured attraction. Soyoil futures soared to nearly two-week highs, buoyed by strong gains in crude oil futures and reports of traders liquidating long meal, short oil spreads.

 

The movement of the spread bounced May's oil share amid market ideas U.S. soyoil export demand could get a boost, as the difference in its trading price and that of palm oil is narrowing. Palm oil had traded at a significant discount to soyoil, but of late the spread has narrowed by US$37 to US$40 a tonne.

 

May oil share ended at 37.58%, up from Tuesday's close of 35.9%. The May crush ended at 62 1/2 cents.