March 23, 2010

 

CBOT Soy Review on Monday: Beans at 1-month high on other markets' moves

 

 

Soy futures at the Chicago Board of Trade rallied to one-month highs Monday, managing to rebound from early declines on a reversal in outside markets and position evening heading toward next week's planting reports.

 

Nearby CBOT May soy, which is also the most-active contract, settled 6 3/4 cents, or 0.70% higher, at US$9.68 1/2 per bushel.

 

A quiet news front kept traders eyeing movements in the U.S. dollar, and once the greenback retreated lower and crude oil futures recovered, buyers emerged to underpin prices, analysts said.

 

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.

 

Light support from talk of wet South American weather conditions slowing the record harvest allowed futures to offset the pressure from big supplies moving to market in Brazil and Argentina. Lingering concerns about tightening old-crop U.S. soy stocks added underlying support as well.

 

The jockeying of positions ahead of the March 31 reports from the U.S. Department of Agriculture, on planting intentions and quarterly stocks, also helped futures recover from their early declines.

 

Meanwhile, old/new crop spreading was featured. Nearby contracts gained at the expense of deferred months on outlooks for increased 2010 U.S. soy plantings, particularly with wet conditions raising concerns about some corn acres shifting to soy.

 

Otherwise, technically inspired buying played a supportive role. The ability of the most active May future to hold above key chart support at its 50-day moving average gave buyers confidence that a near-term low was in place.

 

Speculative funds were estimated buyers of 4,000 lots in soy, 1,000 lots in soymeal, and 2,000 lots in soyoil. Fund activity is a measure of investment money flow in the market.

 

 

Soy Products

 

Soy product futures rose in unison with soy futures. Soymeal futures followed soy, with technically inspired buying helping prices climb to one-month highs. Soyoil futures ended higher, rallying with soy while garnering strength from a bounce in crude oil futures from early losses, analysts said. Soyoil is linked to crude oil because biodiesel is made from soyoil, a byproduct of soy, and funds often trade in a basket of commodities.

 

May soymeal ended US$1.20, or 0.44%, higher at US$271.40 per short tonne, while May soyoil settled 42 points, or 1.10%, higher at 39.72.

 

May oil share was 42.26% while the May soy crush ended at 65 1/2 cents.