March 5, 2009

 

CBOT Soy Review on Wednesday: Bounce on supportive outside markets

 

 

Chicago Board of Trade soybean futures climbed Wednesday, continuing Tuesday's recovery bounce on the supportive influence of outside markets.

 

CBOT March soybeans settled 12 1/2 cents higher at US$8.75 1/2, and May soybeans ended 15 cents higher at US$8.53 1/2. November soybeans settled 19 cents higher at US$8.10 1/4.

 

May soy meal settled US$2.60 higher at US$267.30 per short tonne. May soyoil finished 57 points higher at 30.99 cents per pound.

 

The market experienced a light volume corrective rally, predicated on the absence of outside market pressure, said John Kleist, broker/analyst with Allendale Inc. in McHenry, Ill.

 

A rise in equities and a spike in crude oil futures served as the catalyst for an extension of Tuesday's short covering bounce, as outside markets stabilized amid the absence of new bearish economic news, Kleist added.

 

The supportive theme was consistent, but traders viewed the gains as no more than a short term bounce, not a change in the overall bearish trend.

 

The market was a little oversold, and even with the rise in stock indexes, the Dow Jones Industrial Average remains at its lowest levels in nearly 12 years, below the 7,000 level, Kleist said.

 

Private crop estimates projecting higher Argentina output and the prospects of slowing export demand amid progress in Argentina government and farmer negotiations were underlying features limiting upside potential, traders said.

 

In pit trades, speculative fund buying was estimated at 3,000 lots.

 

Private analytical firm Informa Economics increased its estimate Wednesday for Argentina's 2008-09 soybean crop and cut its estimate for Brazil's crop, traders said. Informa pegged Argentina's crop at 44.5 million tonnes, up 750,000 tonnes from its estimate last month, and Informa estimated Brazil's 2008-09 soybean crop at 57.5 million tonnes, down 1 million tonnes from its estimate last month due to lower yields reported in Parana, traders said.

 

Meanwhile, the Rosario Grain Exchange said in a special report Wednesday, Argentina's 2008-09 soybean production will total just 41.7 million metric tonnes, down sharply from initial expectations of 50 million tonnes due to drought damage.

 

The U.S. Department of Agriculture in February estimated Argentina's soybean crop at 43.8 million tonnes and Brazil's crop at 57 million. The USDA is scheduled to issue updated estimates at 8:30 a.m. EDT March 11.

 

On tap for Thursday, USDA's weekly export sales report will be released at 8:30 a.m. EST Thursday. Analysts surveyed by Dow Jones Newswires estimate soybean sales for the week ended Feb. 26 in a range of 300,000 to 600,000 metric tonnes. Soymeal export sales are seen between 75,000 and 125,000 tonnes, while soyoil sales are pegged between 5,000 and 10,000 tonnes.

 

 

SOY PRODUCTS

 

Soy product futures managed to climb in step with advances in soybeans. Soyoil futures were the upside leader, gaining product share on support from a spike in crude oil futures. Soymeal ended higher, buoyed by short covering and tight supply issues associated with a slow crushing pace and tight farmer holding of soybean inventories, analysts said.

 

May oil share ended at 36.7% up from Tuesday's close of 36.49%. The May crush ended at 60 1/2 cents.

 

In pit trades, speculative fund buying was estimated at 1,000 lots in soyoil.