March 2, 2010

 

CBOT Soy Review on Monday: Soy end higher amid spread trading

 

 

Chicago Board of Trade soy futures bucked a weaker trend in the grain markets Monday and finished slightly firmer amid inter-market spreading.

 

May soy rose 1 1/2 cents, or 0.2%, to US$9.62 1/2 a bushel. May soyoil ended up 20 points, or 0.5%, at 39.90 cents per pound. May soymeal slipped US$1.60, or 0.6%, to US$268.40 per short tonne.

 

Traders were buying soy and selling corn in spread trades. Another main feature in the soy complex was buying of soyoil and selling soymeal, an analyst said. Commodity funds bought an estimated 2,000 soy contracts.

 

There was some support for soy from worries about wetness slowing the harvest in Brazil, said Mike Zuzolo, president of Global Commodity Analytics & Consulting. That could temporarily keep the door open for U.S. soy exports because the U.S. and South America compete for business, another analyst said. Production typically shifts to South America this time of year as Brazil and Argentina harvest their crops and the U.S. prepares to plant later in the spring.

 

In the U.S., it's supportive that "a lesser amount of cash beans seem to be streaming out of producers' hands" than corn, Zuzolo said. Corn ended down about 1.9%, while wheat fell 2.8%.

 

Traders looking ahead to U.S. Department of Agriculture crop reports due out March 10 are nervous about the potential for a dip in U.S. soy ending stocks, said Tim Hannagan, analyst for PFG Best. They don't want to be short heading into the reports, he said.

 

 

Soy Products

 

Traders said participants were buying soyoil and selling soymeal in inter-market spread trades. Expectations for increased demand, including from India, helped support soyoil, an analyst said.

 

Commodity funds sold an estimated 1,000 soymeal contracts and bought an estimated 3,000 soyoil contracts.

 

"This was a buy the oil, sell the meal" play, Hannagan said.

 

Traders started unwinding long meal/short oil spreads during the end of February, Hannagan said. They had put on those spreads heading into winter last year amid expectations for increased feeding of soymeal, he said.