March 4, 2010

 

CBOT Soy Review on Wednesday: End steady, fails to sustain early bounce

 

 

Chicago Board of Trade soy futures ended mostly steady Wednesday, backpedaling from early advances on end-of-the-day position evening in the absence of fresh fundamental news.

 

CBOT March soy ended 1/4 cent or 0.03% higher at US$9.54 1/2, and May soy were unchanged at US$9.63 1/2.

 

A quiet news front left futures without fundamental strength to support its initial gains, as worries about increased global supplies overshadowed the bullish influence of a falling U.S. dollar, analysts said.

 

The drop in the dollar and rise in crude oil futures provided a psychological spark to lift prices in early trade. Technical buying, firm cash prices and a general lack of sellers opened the door for prices to bounce to one-week highs.

 

However, "the weight of lower soymeal values, a lack of follow-through buying and a record South American soy harvest served as bearish factors to dampen bullish thoughts down the stretch," a CBOT floor analyst said.

 

The underlying uncertainties of the South American harvest and U.S. spring plantings provided enough strength to limit losses, with traders anticipating a light volume, choppy theme to continue heading into next week's supply-and-demand report.

 

Speculative funds were estimated buyers of 1,000 lots each in soy and soyoil. Speculative funds were estimated sellers of 1,000 lots in soymeal. Fund activity is a measure of investment money flow in the market.

 

On tap for Thursday, U.S. Department of Agriculture's weekly export sales report will be released at 8:30 a.m. EST. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Feb. 25 to be in the range of 200,000 to 350,000 metric tonnes. Soymeal export sales are seen between 50,000 and 150,000 tonnes, while soyoil sales are pegged between 10,000 and 30,000 tonnes.

 

 

Soy Products

 

Soyoil futures settled higher, climbing on the bullish influence of a weaker U.S. dollar and firmer crude oil futures. The market was also energized by oil/meal spreading, with optimistic outlooks for a tax credit for the biodiesel industry raising hopes of increased soyoil usage, analysts said.

 

Soymeal futures drifted lower, losing value in the overall crush compared to soyoil on adjustments in the meal/oil spread relationship. Unexpected commercial deliveries against the spot month CBOT soymeal contract sent negative signals to the market place. The deliveries were seen as a signal of waning export and domestic demand, a CBOT floor analyst said. "Processors are seemingly more willing to unload inventories amid outlooks for increased competition from South American supplies," he added.

 

March soymeal settled US$4.010 or 1.48% lower at US$266.50, and the May contract dropped US$1.00 or 0.37% to US$267.30 per short tonne. March soyoil rose 21 points or 0.53% to 40.02 cents per pound, while the May contract settled 20 points or 0.50% higher at 40.40.

 

May oil share was 43.09% while the May soy crush ended at 69 cents.