March 24, 2009

 

CBOT Soy Review on Monday: Beans up; but stumble on profit-taking

 

 

Soybean futures on the Chicago Board of Trade continued a three-week ascent from prior lows Monday on outside market strength and Argentine strike concerns, but finished well off its highs on late profit taking.

 

CBOT May soybeans ended 3 1/2 cents higher at US$9.55 1/2, and November soybeans settled 2 1/2 cents higher at US$8.953 1/2.

 

May soy meal settled US$2.10 higher at US$298.40 per short tonne. May soyoil finished 85 points higher at 33.10 cents per pound. Strong gains in outside financial markets provided support to underpin prices after an early spike to higher levels on Argentina strike issues failed to find follow-through buying at session highs, said John Kleist, broker/analyst at Allendale Inc.

 

The lack of sustainable volume at higher levels, coupled with cash selling coming on board, opened the door for traders to book some profits, analysts said.

 

However, a spike in equities on optimistic outlooks from a U.S. government bailout plan for the banking industry, early weakness in the U.S. dollar and higher crude oil prices eased some economic fears to pull buying off the sidelines, analysts added.

 

Nevertheless, the market remained hesitant to aggressively push prices in an uncertain longer term economic environment, and once there was a void of buying, sellers emerged, Kleist said.

 

The nearby May contract initially climbed to five-week highs, but its subsequent slide late in the day have some traders looking for follow through selling in overnight trade.

 

Unless outside markets rise overnight or tensions escalate in Argentina raising hopes of increased U.S. export demand, traders are expected to keep a cautious approach amid overbought conditions, a CBOT floor analyst said.

 

Argentina is the world's third largest producer of soybeans, but is the global leader in soyoil and soymeal exports.

 

Argentine farmers launched a one week strike to protest export taxes on grains Friday. The new strike came as protesting farmers manned dozens of roadblocks across key highways in a move reminiscent of the crippling blockades thrown up in 2008.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soyoil gaining product share at the expense of soymeal. Soyoil was buoyed by spillover strength from crude oil futures, fresh export demand and an adjustment in the meal/oil spread relationship, analysts said.

 

U.S. Department of Agriculture announced Monday private exporters reported the sale of 20,000 metric tonnes of U.S. soyoil to unknown destinations for delivery in the 2008-09 marketing year.

 

Soymeal stumbled down the stretch, retreating on oil/meal spreading and selling attributed to soybeans pulling back from early gains.

 

May oil share ended at 35.68%. The May crush ended at 65 cents.