March 16, 2010

 

CBOT Soy Review on Monday: Exhausted selling, fundamentals support beans

 

 

Chicago Board of Trade soy futures ended higher Monday, retracing Friday's declines on exhausted selling and supportive domestic fundamentals.

 

CBOT May soy settled 4 1/2 cents or 0.49% higher at US$9.30.

 

The market held firm after early weakness subsided, finding support in the face of a stronger U.S. dollar and sharp declines in crude oil futures.

 

"The market has found an area of value, continuing to hold above February lows, with tight domestic supplies an underpinning feature, said John Kleist, broker/analyst with Allendale Inc.

 

The world supply outlook is large, but with domestic ending stocks forecast below 200-million bushels by U.S. Department of Agriculture last week, provides psychological strength.

 

A larger-than-expected crush report, reflecting a record crush pace for the month of February provided fresh fundamental support.

 

National Oilseed Processor Association said 148.351 million bushels of soy were crushed in February. That's down from 162.4 million in January, but higher than the average analyst estimate of 144.5 million

 

Downside pressure was also limited by the recent sharp break in prices that reduced the need for new selling pressure, analysts said.

 

However, the overall fundamental theme remains bearish, with the progression of a record projected South American harvest and concerns about future Chinese demand as the Asian nation attempts to cool inflation limits upside potential.

 

Speculative funds were estimated buyers of 3,000 lots in soy, and 2,000 lots in soymeal. Fund selling was estimated at 3,000 lots in soyoil. Fund activity is a measure of investment money flow in the market.

 

 

Soy Products

 

Soyoil futures tumbled Monday, continuing to correct from prior highs on building inventories and spillover pressure from sharp declines in crude oil futures. Adjustments in the soyoil/soymeal spread relationship were featured attractions, traders said.

 

Soymeal futures ended higher, supported by corrective action in the meal/oil spread. The market managed to bounce back after setting new 1-year lows in overnight trade.

 

May soymeal ended US$6.30 or 2.51% higher at US$257.60 per short tonne, while May soyoil settled 80 points or 2.02% lower at 38.75.

 

May oil share was 42.92% while the May soy crush ended at 62 1/4 cents.