March 7, 2009

 

CBOT Soy Review on Friday: Bounce; cash basis, outsides underpin

 

 

Chicago Board of Trade soybean futures ended higher Friday, bouncing on cash market strength and spillover support from outside markets.

 

CBOT March soybeans settled 16 1/2 cents higher at US$8.79, and May soybeans ended 15 cents higher at US$8.67. November soybeans settled 15 1/2 cents higher at US$8.15. In pit trades, speculative fund buying was estimated at 3,000 lots.

 

May soy meal settled US$4.00 higher at US$265.30 per short tonne. May soyoil finished 32 points higher at 31.03 cents per pound.

 

The combination of firm cash basis levels and support from outside markets laid the ground work for futures to rebound from Thursday's setback, analysts said.

 

Speculative short-covering was featured, with weakness in the U.S. dollar and higher crude oil futures also supporting prices.

 

Tight nearby cash supplies continue to boost cash basis levels, with the widening March/May inverse an underlying feature supporting prices heading into the weekend.

 

The absence of any other fresh fundamental directives kept attention on financial markets, with the weakness of the U.S. dollar and higher crude and metals opening the door for traders to cover some shorts, analysts said.

 

Meanwhile, trade positioning heading toward next week's supply and demand report helped extend the advances, as speculative shorts remain at risk of bullish adjustments to the domestic and world balance sheet, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

The U.S. Department of Agriculture is scheduled to release updated supply and demand tables at 8:30 a.m. EDT (1230 GMT) Wednesday.

 

In other news, continued rainfall has brought relief to Argentina's drought-stricken soybean crop, confirming a tentative production forecast of 42.5 million metric tonnes, the Buenos Aires Cereals Exchange said in its weekly crop report Friday. Last week, the exchange said that more rain was needed for the crop's potential to climb over 40 million tonnes.

 

Brazilian agribusiness consultants are maintaining their estimates for Brazil to produce around 57 million metric tonnes for the new 2008-09 soy crop, and don't expect major changes to Brazil's National Commodities Supply Corp. outlook next week, soy industry sources said Friday.

 

 

SOY PRODUCTS

 

Soy product futures ended higher across the board, rising on pre-weekend short covering. Firm cash basis levels, supportive outside influences and spillover from soybeans underpinned soymeal futures, traders said.

 

Soyoil futures bounced in step with the rest of the complex, with spillover support from crude oil futures sparking short covering.

 

May oil share ended at 36.9%. The May crush ended at 58 cents.

 

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