March 13, 2010

 

CBOT Soy Review on Friday: Futures stumble, lack supportive influences

 

 

Soy futures at the Chicago Board of Trade stumbled Friday, continuing Thursday's slide on a lack of supportive influences.

 

CBOT May soy settled 5 cents, or 0.54%, lower at US$9.25 1/2.

 

Bearish fundamentals remained the underlying drivers of the market, with concerns about waning export demand, an advancing South American soy harvest and ample world oilseed supplies weighing on prices, analysts said.

 

Active contracts dropped to five-week lows, as traders were reluctant to buy into a market with bearish fundamental features.

 

Prices initially rose, climbing on supportive outside market influences and an announced sale of old crop U.S. soy to China. The sale to Chine excited market bulls, as it was seen as a sign that Chinese demand had returned on recent price declines, said Dan Basse, president of AgResource Co. in Chicago.

 

However, the advances were short lived, as news the U.S. Department of Agriculture had mistakenly reported the China purchase as a 2009-10 marketing year sale instead of a 2010-11 year sale took the wind out of bulls sails, said Basse.

 

USDA reported on Thursday China had canceled 192,400 tonnes of previous purchases for the current 2009-2010 crop year, and that was seen as a signal that soy buyers are moving away from U.S. supplies and are instead buying soy from South America.

 

A reversal in crude oil futures, with prices sliding into negative territory, provided psychological pressure to help pin prices in negative territory as well. Soy are linked to crude oil because biodiesel is made from soyoil, a byproduct of soy, and funds often trade in a basket of commodities.

 

Speculative funds were estimated sellers of 4,000 lots in soy, 1,000 lots in soymeal and 3,000 lots in soyoil. Fund activity is a measure of investment money flow in the market.

 

On tap for Monday, the National Oilseed Processors Association will release its monthly soy crush report for February at 8:30 a.m. EDT (1230 GMT). The report is expected to show crushings retreating from the previous month, coming in near 144.5 million bushels, according to a survey of industry analysts.

 

 

Soy Products

 

Soyoil futures tumbled for the second consecutive day, dropping to two-week lows. Profit taking from prior gains served as the catalyst for the declines, analyst said. A reversal in crude oil futures from earlier gains and trade sentiment that the market has digested the bullish prospects of a renewed biodiesel tax credit, opened the door for previous buyers to take profits, said Basse.

 

Soymeal futures ended modestly lower with soy, but losses were limited by the profit taking on soyoil/soymeal spreads, traders said.

 

May soymeal ended US$1.30, or 0.51%, lower at US$251.30 per short tonne, while May soyoil settled 56 points, or 1.30%, lower at 40.11.

 

May oil share was 44.03%, while the May soy crush ended at 62 1/2 cents.