March 20, 2010

 

CBOT Soy Review on Friday: Settle higher on late position squaring

 

 

Chicago Board of Trade soybean futures settled higher Friday, managing to carve out modest gains on end-of-day position squaring.

 

Nearby CBOT May soybeans, which is also the most-active contract, settled 2 1/4 cents, or 0.23%, higher at US$9.61 3/4 a bushel.

 

The market shook off the bearish influence of a rising U.S. dollar, bouncing back from session-long losses on late positioning and short-covering, analysts said. Speculative funds were estimated buyers of 1,000 lots in soybeans.

 

The weight of a rallying U.S. dollar sent negative waves rippling through commodities in general. However, the ability of May futures to hold technical chart support and a lack of aggressive selling enabled futures to find strength to climb into positive territory down the stretch.

 

A firm dollar is often seen as bearish because of perceptions that it makes U.S. grains less attractive to foreign buyers and reduces investors' appetite for risk.

 

The market mirrored the activity of Thursday's session, managing to escape the negative clutches of bearish outside markets as traders took profits on short positions ahead of the weekend.

 

Futures continue to maintain a firmer bias following last week's losses, as traders take a cautious approach heading toward the U.S. Department of Agriculture's March 31 prospective plantings report due to uncertainty about acreage.

 

However, despite the firm bias, upside potential remained limited by private forecasts for increased 2010 U.S. soybean acres and weakening basis levels as the South American harvest advances rapidly, traders said.

 

Private analytical firm Informa Economics on Friday raised its estimates for 2010 U.S. soybean acres, traders said. The firm pegged soybean acreage at 78.629 million, compared with its January estimate of 77.9 million. Last year, farmers planted 77.5 million acres of soybeans, according to the USDA.

 

Meanwhile, Commodity research firm Allendale Inc. said an annual survey of U.S. farmers indicated they intend to plant more soybean acres than ever. Soybean plantings are estimated at 79.1 million acres, up 2.1% from last year, according to Allendale's survey.

 

 

Soy Products

 

Soy product futures edged higher Friday, rebounding from earlier lows on late short covering. The combination of a firmer U.S. dollar and sharp declines in crude oil weighed on prices for most of the day. However, an absence of follow-through selling to extend earlier losses and a late bounce in soybeans provided a boost to lift prices into positive territory, traders said.

 

May soymeal ended US$0.30, or 0.11%, higher at US$270.20 per short tonne, while May soyoil settled 5 points, or 0.13%, higher at 39.30.

 

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