March 18, 2009

 

CBOT Soy Review on Tuesday: Gains sustained as crude oil turns positive

 

 

Chicago Board of Trade soybean futures finished higher Tuesday after drifting between gains and losses throughout the session.

 

May soybean contracts finished up 2 cents a bushel to close at US$9.13. The contract traded an 18-cent range, topping at US$9.21. July soybeans added 3 cents to close at US$9.10 1/2. It spread an 18-cent range, topping at US$9.18. November soybeans gained 10 1/2 cents to US$8.61.

 

Midday estimates pegged speculative fund buying at 2,000CBOT soybean contracts.

 

Stabilizing equities and crude oil moving pressing toward US$50 at its highest levels since January are added support, a CBOT floor trader said.

 

But with the market failing to rally back to or above its opening range, the 100-day moving average at US$9.25 remained untested, the trader added.

 

A strong rally Monday prompted traders to back and fill soybeans Tuesday, said Rich Feltes, research director at MF Global, in a market commentary Tuesday. A tight cash market for soybeans provided support on the breaks, he added.

 

"The markets act like they're in the mood to take on more risk premium ahead of month end acreage report, specifically, and uncertain '09 growing season in general," Feltes said.

 

The U.S. Department of Agriculture's prospective plantings report will offer additional ideas about U.S. grain and soy supply in 2009. The report is due for release March 31 at 8:30 a.m. EDT.

 

The trade also awaits news to emerge from talks between Argentine farmers and the government, who are engaged in the fourth round of weekly talks to resolve an export-tax dispute.

 

Reduction of the soy export tax is a key demand of the farmers, but just before the meeting, Rural Society President Hugo Biolcati said the government refuses to discuss the soy taxes Tuesday. Farmers will press the Congressional Committee on tax issue on Thursday, Biolcati said.

 

Traders say a solution will take the steam out the U.S. soybean market, but still ideas remain that the Argentine negotiations will be a long, drawn-out process, supportive of U.S. soybean exports.

 

"We're still hearing China is shopping U.S. as we are competitive, at least through April," a CBOT broker said. "We're not seeing much in May from them yet."

 

 

SOY PRODUCTS

 

The CBOT soy complex finished mixed Tuesday.

 

"The market is pretty featureless, really," a CBOT broker said.

 

Short-covering buying, which defined Monday's trade, eased Tuesday, he added.

 

May soymeal dropped US$2.40 to US$286 per short tonne and May soyoil added 45 points to 31.31 cents per pound. Speculative funds bought an estimated 1,000 soyoil and were seen even in soymeal, according to midday estimates.

 

May soyoil share ended at 35.37% and the May crush ended at 60 1/2 cents.