March 12, 2008

 

CBOT Soy Review on Tuesday: Soybeans up on constructive USDA data

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, underpinned by supportive U.S. Department of Agriculture supply and demand data.

 

March soybeans ended 4 1/2 cents higher at US$13.92 1/2, May soybeans settled 1 1/4 cent higher at US$14.07 3/4, July soybeans finished 3 cents higher at US$14.23 1/2 and November soybeans ended 15 1/4 cents higher at US$13.15 1/4. May soymeal settled US$7.50 lower at US$350.80 per short tonne. May soyoil finished 105 points higher at 63.19 cents per pound.

 

"The day's gains were fundamentally driven, with the underlying theme export demand," said Terry Reilly, analyst with Citigroup Global Markets Inc. in Chicago.

 

The tightening of the domestic soybean balance sheet and confirmation of strong export demand served as the catalyst to lead futures higher, Reilly added.

 

Meanwhile, uncertainties tied to 2008 acreage amid tight carryover stocks is setting the trade up for a year with little margin error for 2008 production, and that continues to feed into the bullish long range psychology of the market, analysts added.

 

Inflationary based buying in commodities, strength from limit up wheat futures and firm soyoil prices added further support to attract speculative buying and aide the market's recovery from recent declines, traders said.

 

The market was in recovery mode for most of the day, following a corrective sell-off in recent sessions. The exhaustion of the speculative long liquidation that plagued prices last week has allowed the market to return its focus to tightening domestic supplies, traders added.

 

The USDA cut 2007-08 U.S. soybean ending stocks by 20 million bushels to 140 million from the 160 million bushels forecast in February, and below the average analyst guess of 153 million bushels.

 

The USDA raised U.S. exports by 20 million bushels to 1.025 billion bushels. USDA said the higher exports reflected strong sales, especially to China, and reduced exports from Brazil.

 

In pit trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.

 

 

SOY PRODUCTS

 

Soyoil futures rallied Tuesday, rebounding from prior losses. The market climbed, shaking off the effects of a bearishly construed USDA supply and demand report, analysts said. The unwinding of soymeal/soyoil spreads and firm offshore values for soyoil served as the catalyst to lead to upward push, said Reilly.

 

Larger-than-expected declines in use for biodiesel and increased production totals were seen as negative for prices, but after a string of limit closes, record high crude oil values and strong export demand, futures were able to stage a firm bounce from recent declines, Reilly added. Meanwhile, rumors of fresh demand surfacing from reports of firmer overnight vegoil prices in Asia, Rotterdam and India added to the bullish tonnee, analysts said.

 

U.S. soyoil ending stocks were estimated at 2.837 billion pounds, up from 2.502 billion. Soyoil production was raised due to an increase in the oil extraction rate, USDA reported. Domestic soyoil use was cut due to lower projected use for biodiesel. However, soyoil exports were raised, reflecting strong sales and shipments through February, USDA reported.

 

Soymeal futures ended lower, succumbing to pressure from the unwinding of meal/oil spreads, analysts added.

 

May oil share ended at 47.39% and the May crush ended at 59 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses.

 

In soyoil trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 3,000 lots.