February 27, 2010

 

CBOT Soy Review on Friday: Climb; month-end buys, outside market support

 

 

Chicago Board of Trade soy futures ended higher Friday, retracing Thursday's losses on end-of-month position evening and supportive outside market influences.

 

CBOT March soy ended 9 1/2 cents, or 1.01%, higher at US$9.51, and May soy settled 11 cents, or 1.16%, higher at US$9.61.

 

Positive seasonal trading patterns for the month of March encouraged traders to cover some previously sold positions at month end, analysts said. Fears that fresh speculative buying would emerge in March, based on seasonal trades, triggered a round of short covering.

 

The inability of the market to challenge underlying chart support provided technical strength to attract buying as well. Buyers also gathered encouragement from broader markets, with a weaker U.S. dollar and strong gains in crude oil futures providing bullish signals, traders said.

 

The market received a dose of fundamental support to start the day, with news of China purchasing U.S. soy.

 

"The sale was encouraging, as it comes at a time when industry observers anticipate China will shift its buying needs to South America," a CBOT floor analyst said.

 

The U.S. Department of Agriculture announced Friday private export sales of 113,000 metric tonnes of soy for delivery to China in the 2010-11 marketing year.

 

However, futures failed to challenge recent highs, with buyer enthusiasm limited by the potential for record harvested crops in South America. The large influx of supplies from Brazil and Argentina will created increased competition in world soy export markets.

 

Speculative funds were estimated buyers of 6,000 lots in soy, 1,000 lots in soymeal 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.

 

 

Soy Products

 

Soyoil futures ended higher, rallying to 6-week highs during Friday's trading session. Weakness in the U.S. dollar coupled with strong gains in crude oil futures provided a bullish spark to lift prices, analysts said. Technical buying and adjustments in the meal/oil spread relationship allowed soyoil to gain product share in the overall value of the soy crush, traders said.

 

Soymeal futures ended higher, following the lead of soy. However, the market emerged as the weakest link in the soy complex, with oil/meal spreading limiting advances.

 

March soymeal settled US$1.10, or 0.40%, higher at US$273.20, and the May contract gained US$2.80, or 1.05%, to US$270.00 per short tonne. March soyoil rose 76 points, or 1.98%, to 39.29 cents per pound, while the May contract settled 73 points, or 1.87%, higher at 39.70.

 

May oil share was 42.47% while the May soy crush ended at 69 3/4 cents.