April 3, 2008

 

CBOT Soy Review on Wednesday: Up; beans shake off early weakness; oil rally

 

 

Chicago Board of Trade soybean futures rallied from lower levels Wednesday to close higher on technical strength and a strong rally in soyoil. Corn trading to record highs also helped fuel the buying interest, traders and analysts said.

 

Nearby May soybeans rose 32 cents a bushel to settle at US$12.43, and new-crop November added 22 1/2 cents to US$11.69 3/4.

 

After the recent sell-off that culminated in nearly four-month lows Tuesday, soybean prices seem to have stabilized, an analyst said.

 

"It looks like we've put in a near-term or intermediate-term low and I think we're not going to see a great deal of additional strength but at least some stability off of Tuesday's low," said Doug Harper, analyst at Brock Associates in Milwaukee.

 

While soybean futures are now a long way from the March 3 high of US$15.86 1/2, at least prices aren't continuing to fall in the face of news from the U.S. Department of Agriculture on Monday that farmers would plant 18% more acres to beans this spring compared to last year, a trader said.

 

However, price relationships have changed and it is currently more attractive financially to plant corn than soybeans. As long as this relationship remains intact, farmers will likely try to plant more corn this year, which is a supportive development for soybean futures.

 

Purdue University Extension Economist Chris Hurt said the returns for corn are about US$135 higher per acre more than soybeans on average-quality land, while quality land will fetch a US$200 premium.

 

As corn prices rise, soybean futures may try and follow, and spillover from the rallying corn market was supportive for soybeans, the trader said.

 

Demand was also a bullish influence, as a sale of 226,000 tonnes of soybeans to China for the 2007-08 marketing year boosted market sentiment and helped turn prices around from the lower opening.

 

 

SOY PRODUCTS

 

Soy products closed steady to higher, led by a sharp rally in soyoil.

 

Funds were active traders in oil, buying a net 5,000 contracts. Commercials were also active on both sides of the market.

 

In meal, fund activity was much lighter and they bought and sold an even number of contracts.

 

The fund buying in oil was also attributed to a technical bounce from this week's lows, as the May contract rallied to near the 10-day moving average at 55.30 before stalling.

 

Nearby May soyoil rose 290 points to settle at 55.05 cents a pound, while May soymeal added US$0.50 to end at US$331.00 a short tonne.