March 25, 2010

 

CBOT Soy Review on Wednesday: Rising dollar pressures prices

 

 

Chicago Board of Trade soy futures settled lower Wednesday, as strong gains in the U.S. dollar produced broad-based losses in international commodity prices.

 

Nearby CBOT May soy, the most-active contract, settled 8 cents, or 0.83%, lower at US$9.60 per bushel.

 

The U.S. dollar index's rise to 2010 highs on European financial issues laid the ground work for the market's slide. In the absence of fresh supportive fundamental news, the dollar's influence and technical pressure combined to keep soy prices on the defensive, analysts said.

 

A firm dollar is often seen as bearish, attracting speculative selling because it makes U.S. grains and oilseeds less attractive to foreign buyers and reduces investors' appetite for risk.

 

Perceptions that U.S. prices were high compared with South America in the face of an advancing harvest in Argentina and Brazil added to the lower tonnee.

 

A weaker Brazilian real and a shift in forecasts to drier conditions in some of Brazil's wettest areas provided some fundamental pressure for prices as well, said Mike Zuzolo, president of Global Commodity Analytics.

 

The weaker real weighs on Brazil's prices, as that leads to lower export revenue for Brazil, Zuzolo said. Drier weather for Brazil will help speed up the harvest and the movement of supplies to market, he added.

 

However, the inability of the May future to penetrate chart support at its 50-day moving average sparked some short-covering to put a floor under prices, traders said.

 

Speculative funds were estimated sellers of 5,000 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.

 

On tap for Thursday, the U.S. Census Bureau's February crush report is scheduled for release at 8 a.m. EDT (1200 GMT). The Census Bureau is expected to estimate the February soy crush at 153.8 million bushels, down from the prior month, but still representing record processing for the month of February, according to a survey of industry analysts.

 

The 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 18 to be in the range of 300,000 to 750,000 metric tonnes. Soymeal export sales are seen between 75,000 and 175,000 tonnes, while soyoil sales are pegged between 5,000 and 15,000 tonnes.

 

 

Soy Products

 

Soy product futures stumbled with soy. A quiet news front and bearish outside financial market influences kept pressure on prices, analysts said. Soymeal managed to gain value in the crush spread versus soyoil, as weak crude oil futures and building inventories weighed on soyoil futures.

 

May soymeal ended US$1, or 0.37%, lower at US$270.90 per short tonne, while May soyoil settled 46 points, or 1.16%, lower at 39.08.

 

May oil share was 42%, while the May soy crush margin ended at 65 3/4 cents.