March 31, 2010

 

CBOT Soy Review on Tuesday: Bounce on pre-USDA report short-covering

 

 

Chicago Board of Trade soy futures ended higher Tuesday, finishing at the session highs on late short-covering ahead of Wednesday's planting and stocks reports.

 

Nearby CBOT May soy, which is also the most-active contract settled 6 1/2 cents or 0.67% higher at US$9.74 per bushel.

 

Outlooks for a potentially bullish quarterly stocks report on Wednesday provided support to attract buyers in late dealings, CBOT traders said. Strong usage for exports and crush in the first half of the marketing year have traders anticipating the quarterly stocks report may reveal that projected ending inventories are overstated.

 

The market experienced choppy action, with conflicting signals from outside markets keeping traders in a cautious mood heading into Wednesday's government reports. Nearby contracts climbed late despite a firmer U.S. dollar, with lingering concerns about a dock workers strike in Argentina lending support.

 

However, prospects for a quick resolution to the Argentine strike took some of the edge off prices, with cash basis levels declining.

 

Bull spreading was featured, with nearby contracts climbing versus deferred months. Concerns about already tight projected U.S. ending stocks buoyed old crop futures, while bearish 2010 planting outlooks and record South American harvests weighed on deferred months. The May/Nov spread widened to 47 1/2 cents, up 5 1/2 cents from Monday.

 

Short covering ahead of a potentially bullish quarterly stocks report on Wednesday helped support prices down the stretch, but failed to generate enough momentum for prices to challenge Monday's highs. Speculative funds were estimated buyers of 4,000 lots in soy. Fund activity is a measure of investment money flow in the market.

 

U.S. Department of Agriculture will release its prospective planting and quarterly grain stocks report Wednesday at 8:30 a.m. EDT. The average analyst estimate puts soy area at 78.550 million acres, up from last year's 77.451 million, according to a Dow Jones Newswires survey. The average of estimates by analysts surveyed by Dow Jones Newswires sees soy usage in the second quarter of the 2009-10 marketing year coming in around 1.130 billion bushels, which would bring stocks down to 1.207 billion bushels.

 

 

Soy Products

 

Soymeal futures rallied to five-week highs, buoyed by concerns the Argentina port strike could lead to fresh U.S. demand the longer the workers' dispute threatens Argentina shipments. May soymeal ended US$6.20 or 2.24% higher at US$283.10 per short tonne. Speculative funds were estimated buyers of 2,000 lots in soymeal.

 

Soyoil futures stumbled, divorcing from the supportive tonnee in the rest of the complex. Meal/oil spreading weighed on prices, with concerns about China taking measures to limit vegoil imports adding to the defensive tonnee, analysts said. May soyoil settled 0.60 cent or 1.53% lower at 38.67. Speculative funds were estimated sellers of 4,000 lots in soyoil.

 

May oil share was 40.58% while the May soy crush margin ended at 74 1/4 cents.