April 17, 2009

 

CBOT Soy Review on Thursday: New highs set for uptrend; fundamentals help

 

 

Chicago Board of Trade soybean futures continued their seven-week march to higher levels Thursday, buoyed by bullish underlying fundamentals.

 

CBOT May soybeans ended 23 1/2 cents higher at US$10.58 1/2, July soybeans settled 19 cents higher at US$10.50 1/2, and November soybeans finished 3 cents higher at US$9.43.

 

May soy meal settled US$11.70 higher at US$329.00 per short tonne. May soyoil finished 20 points lower at 36.75 cents per pound.

 

"Soybeans are a demand-driven market, supported by tight old crop supplies in the face of strong demand from China and incredibly shrinking Argentina crop production estimates," said Greg Wagner, analyst with AgResource Co. in Chicago.

 

Nearby futures rallied to set new highs for the current uptrend, with deferred months buoyed by the need for a strong increase in 2009 production to offset tight supplies carrying over from the 2008-09 marketing year.

 

Meanwhile, end-user buying helped sustain the rally as world cash users of soybeans and soy products were caught with limited forward coverage, Wagner said. With Argentine soy crop estimates down to 35-37 million metric tonnes, end users understand the need for extended forward coverage, he added.

 

On the technical side, May soybeans advanced past key resistance at US$10.50. A close above this price to end the week will set an upside price target of US$11.80-12.20 based on the weekly chart considerations, AgResource forecasts in a market note.

 

U.S. Department of Agriculture reported total weekly soybean export sales were a net 810,100 metric tonnes for the week ended April 9, with China the primary buyer as it snapped up 405,800 tonnes.

 

The Buenos Aires Cereals exchange slashed its forecast for 2008-09 soybean production to 37 million metric tonnes on Wednesday, down 2.4 million tonnes from last week's forecast.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal rallying in unison with soybeans. Nearby soymeal rallied to near seven-month highs, with end-user buying underpinning cash markets. Soyoil futures settled lower, retreating on profit-taking from recent gains and adjustments in the meal/oil spread relationship, analysts said.

 

May oil share ended at 35.8%. The May soybean crush ended at 70 1/2 cents.