March 28, 2009

 

CBOT Soy Review on Friday: Backpedals on pre-weekend positioning

 

 

Chicago Board of Trade soybean futures retreated Friday, backpedaling on pre-weekend position squaring amid overbought conditions.

 

CBOT May soybeans ended 27 cents lower at US$9.17, and November soybeans settled 19 3/4 cents lower at US$8.60 3/4.

 

May soymeal settled US$7.00 lower at US$283.80 per short tonne. May soyoil finished 118 points lower at 32.42 cents per pound.

 

The absence of fresh supportive news to underpin prices set the stage for the declines, as traders reduced risk exposure.

 

The market rallied last week on the Argentina farmers strike, but with the strike scheduled to end Friday, futures lacked fundamental support to attract buyers, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Traders took a cautious approach heading into the weekend, with outlooks for a potentially bearish plantings report next week raising fears in bullish participants' minds. Talk of China releasing some of its soybean reserves to the domestic market added pressure. The move was seen as a measure that would potentially temper import needs.

 

China is the world number one importer of soybeans.

 

The market has turned weak from a technical standpoint and with outside market influences breaking down Friday, buyers had little incentive to push prices and ran for cover, Roose added.

 

Weakness was seen across broader markets Friday, with stocks, crude oil and metals all posting losses, with a firmer U.S. dollar adding to the bearish mix. Economic jitters continue to limit investor optimism.

 

The most active May future slid to over one-week lows, tumbling through major moving average support, while filling a one-week-old chart gap on technical charts.

 

Looking ahead, traders are expected to continue their cautious approach ahead of Tuesday's plantings report, while eyeing developments in Argentina and in outside financial markets for direction.

 

In pit trades, speculative fund selling was estimated at 5,000 lots.

 

The U.S. Department of Agriculture is scheduled to release its prospective planting and quarterly grain stock reports Tuesday at 8:30 a.m. EDT (12:30 GMT). The reports are expected to show an increase in soybean seedings from 2008, with soybean stocks as of March 1 projected to reveal solid second-quarter usage.

 

 

SOY PRODUCTS

 

Soy product futures tumbled Friday, falling in unison with weakness in soybeans. Soyoil lost product share to soymeal despite losses in both markets, as pre-weekend positioning reversed some of Thursday's spread action, analyst said. Borrowed weakness from crude oil added to the woes of soyoil bulls as well, a CBOT floor analyst said.

 

In pit trades, speculative fund selling was estimated at 1,000 lots in soymeal and 2,000 lots in soyoil.

 

May oil share ended at 36.35%. The May crush ended at 64 cents.