April 1, 2009

 

CBOT Soy Review on Tuesday: Soars on bullish USDA data

 

 

Chicago Board of Trade soybean futures rallied Tuesday, soaring in response to bullishly construed prospective acreage forecasts and stocks in all positions according to data released by the U.S. Department of Agriculture.

 

CBOT May soybeans ended 47 1/2 cents higher at US$9.52, and November soybeans settled 50 cents higher at US$8.92.

 

May soy meal settled US$13.80 higher at US$295.30 per short tonne. May soyoil finished 158 points higher at 33.62 cents per pound.

 

The USDA data served as the catalyst to propel futures, as the data effectively promoted a bullish psychology in the market, shaping the direction of prices moving forward, analysts said.

 

The report gave bullish traders reason to be more optimistic about price direction, with tighter supplies generating perceptions the market maybe a lot stronger than previously thought, said Dale Durchholz, analyst with Agrivisor in Bloomingtonne, Ill.

 

New crop futures soared as well, as the trade rekindled the market's battle for acres with corn. At ending stocks levels below 200 million bushels, the market attaches proportionately more importance on each marginal bushel of supply; and Tuesday's results should be seen as constructive for old-crop soybean expiries, J.P. Morgan said in a market note.

 

Technical buying added to the bullish mix, with buyers emerging as prices climbed above major moving averages on technical charts, traders said. Meanwhile, supportive influences from outside financial markets helped keep sellers on the run.

 

Looking ahead, broader economic forces will continue to influence price direction, but weather becomes extremely important moving forward, as any shake up in new crop production potential opens the door for a longer term bullish tonnee, analysts said.

 

Tuesday's USDA departure from industry expectations is not large by historical standards, but old-crop inventories remain tight - exacerbated by export demand partially resulting from Argentine uncertainty, J.P. Morgan said in a market note.

 

The USDA estimated U.S. 2009-10 soybean planted acreage at 76.024 million acres, below the average analyst estimate of 79.251 million. Soybean stocks as of March 1 were 1.302 billion bushels, lower-than-the average estimate of 1.322 billion bushels and near the lower end of trade estimates from a Dow Jones Newswires survey at 1.295 billion. U.S. soybean stocks totaled 1.434 billion on March 1, 2008.

 

In pit trades, speculative fund buying was estimated at 7,000 contracts.

 

 

SOY PRODUCTS

 

Soy product futures climbed in unison with soybeans, energized by bullish planting and stocks data. The combination of USDA data, technical buying and strength from broader markets set the bullish wheels in motion, analysts said.

 

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

 

May oil share ended at 36.28%. The May crush ended at 67 1/2 cents.