US soy futures plummet on firm dollar

 

 

US soy futures posted the biggest drop in more than seven weeks on Thursday (March 4), closing below a key support level at the 20-day moving average as a firm dollar weighed on prices.

 

Traders were focused mostly on technical weakness in both the soy and wheat markets, but heavy fundamentals and bearish outside markets also pressured grain and soy futures.

 

The dollar's gains curtailed demand for US commodities on the international market. Falling crude oil prices, which hurt prospects for biofuel development, also weighed on corn and the soy complex.

 

Relatively high prices for US wheat already have caused overseas buyers to look elsewhere to satisfy their needs. The USDA said on Thursday morning that export sales of wheat were 104,100 tonnes, far below estimates for 300,000-450,000 tonnes.

 

CBOT May soy futures fell 21-1/2 cents to close at US$9.42 a bushel, a drop of 2.2%. The May contract closed at its lowest level since February 9.

 

The nearby soy contract posted its biggest one-day decline in percentage terms since falling 3.2% on January 12.

 

CBOT soft red winter wheat for May delivery was down 13-1/2 cents, or 2.6%, at US$5.02-1/4 a bushel, which also was below its 20-day moving average.

 

Chicago wheat futures had been bounded by support at 20-day moving average and resistance at 40-day moving average.

 

Meanwhile, CBOT May corn ended down 3-3/4 cents at US$3.83 a bushel.

 

Rising soy production in South America has caused most buyers on the export market to turn away from the US as they look to fill their feeding needs.

 

Informa Economics on Thursday raised its estimate of Argentina's 2009-10 soy production to 55.0 million tonnes and its corn production to 21.0 million tonnes, trade sources said.

 

US domestic demand for soy also has showed signs of weakening during the past few weeks. The US Census Bureau reported January soyoil stocks at 3.224 billion pounds, up from 3.110 billion pounds in December.