March 19, 2008

 

CBOT Soy Review on Tuesday: Finds stability on outside market recovery

 

 

Chicago Board of Trade soybean futures ended higher Tuesday, managing to bounce off earlier losses, finding stability after outside financial markets recovered from prior declines.

 

May soybeans settled 4 1/4 cents higher at US$13.07, July soybeans finished 3 1/4 cents higher at US$13.22 and November soybeans ended 11 cents higher at US$12.40. May soymeal settled US$6.70 higher at US$330.50 per short tonne. May soyoil finished 16 points lower at 58.40 cents per pound.

 

The market's gains corresponded with strength in equity and outside financial markets, with good earnings reports from Goldman Sachs and Lehman Brothers as well as outlooks for the Fed to cut interest rates took some of the economic jitters out of the market, said Mike Zuzolo, analyst with Risk Management Commodities Inc. in Lafayette, IN.

 

The U.S. Federal Reserve cut its target for the fed funds rate at which banks lend to each other 75 basis points from 3% to 2.25%, its lowest level since December 2004.

 

Spillover support from higher crude oil and gold futures for most of the day added strength, as did weakness in the U.S. and technical buying associated with ideas the market's losses were a little overdone after dropping nearly US$3.00 a bushel since the first of March, a CBOT floor analyst said.

 

Nevertheless, futures struggled to extend the advances, as weak cash values, ideas Asian markets have peaked and lingering uncertainty revolving around the U.S. economy continued to keep traders taking a cautious approach, Zuzolo added.

 

Traders anticipate choppy, consolidative trade will continue heading into the planting intentions report, as economic jitters keep a lid on advances and ideas the market has extracted enough premium from prices limiting downside moves, traders said.

 

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

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil ending a two-sided session lower. Soyoil futures failed to recover from its defensive theme, as the market continued to extract premium from prices amid ideas Asian vegoil markets had peaked, leaving futures overdone, analysts said. Spillover from climbing crude oil futures provided mild support, but failed to offset speculative selling pressure, analysts added.

 

Soymeal futures rallied, bouncing off earlier losses. The market was buoyed by product spreading, as the market adjusted the spreading relationship between meal and oil, analysts said.

 

May oil share ended at 46.91% and the May crush ended at 66 1/4 cents.

 

In soymeal trades, buyers and sellers were scattered among various commission houses, with speculative fund buying estimated at 2,000 lots.

 

In soyoil trades, ADM Investor Services bought 900 May, and JP Morgan bought 1,000 July. Sellers were scattered among various commission houses. Commercial buying was estimated at 3,000 lots, while speculative fund selling was estimated at 1,000 lots.