March 18, 2010

 

CBOT Soy Review on Wednesday: End near highs on broad based commodity buys

 

 

Soy futures on the Chicago Board of Trade settled higher Wednesday, rallying to session highs near the close on broad based commodity buying.

 

Nearby CBOT May soy, which is also the most-active contract, settled 14 cents or 1.48% higher at US$9.59.

 

Oversold market conditions and a lack of fresh fundamental news allowed a weaker U.S. dollar and higher crude oil futures to attract investment buying, analysts said. The buying pushed prices above resistance levels on technical charts, enticing traders to cover previously sold positions.

 

A lower U.S. dollar supports commodity prices due to perceptions it increases investors' appetite for risk and makes U.S. grain cost less in world markets. Soy are linked to crude oil because biodiesel is made from soyoil and funds often trade in a basket of commodities.

 

Meanwhile, "aside from very supportive outside markets, the buy-side was helped by continued bullish weather," said Mike Zuzolo, president Global Commodity Analytics. "Soy weather in South America is also still providing support by causing minor delays in loading ships as well as continued rainy forecasts in the next 6 days likely stalling harvest efforts from getting at full-stride," he added.

 

Nevertheless, traders expect prices to hold within a recent trading range, as record South American production will continue to provide bearish pressure. Otherwise, traders are looking ahead to the March 31 planting and stock reports, with market shorts covering some positions in an effort to reduce some risk exposure, analysts said.

 

Speculative funds were estimated buyers of 5,000 lots in soy, 2,000 lots in soymeal, and 2,000 lots in soyoil. Fund activity is a measure of investment money flow in the market.

 

On tap for Thursday, U.S. Department of Agriculture's weekly export sales report will be released at 8:30 a.m. EDT. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended March 11, to be in the range of 110,000 to 600,000 metric tonnes. Soymeal export sales are seen between 25,000 and 100,000 tonnes, while soyoil sales are pegged between zero and 15,000 tonnes.

 

 

Soy Products

 

Soy product futures closed higher, rallying in unison with soy futures. Soyoil futures rallied, with strength in crude oil futures lending support to the market's higher theme. Soymeal futures followed soy higher, climbing to 2-week highs as the market continued its correction from oversold conditions, analysts said.

 

May soymeal ended US$5.90 or 2.26% higher at US$267.40 per short tonne, while May soyoil settled 46 points or 1.17% higher at 39.83.

 

May oil share was 43.68% while the May soy crush ended at 67 1/2 cents.