April 18, 2009

 

CBOT Soy Review on Friday: Modest setback following g-week rally

 

 

Soybean futures on the Chicago Board of Trade ended lower Friday, experiencing a modest technical setback following the market's 6-week rally.

 

CBOT May soybeans ended 7 1/2 cents lower at US$10.51, July soybeans settled 9 cents lower at US$10.41 1/2 and November soybeans finished 8 cents lower at US$9.35.

 

May soy meal settled US$2.80 lower at US$326.60 per short tonne. May soyoil finished 2 points higher at 36.77 cents per pound.

 

End-of-the-week profit-taking was featured, as the market took a breather from its recent bullish run amid signs of exhausted buying interest, said Bill Nelson, analyst with Doane Advisory Service in St. Louis, Mo.

 

Futures initially climbed, satisfying a near-term upside technical objective, but an inability to attract follow-through buying uncovered profit taking from recent longs booking some profits heading into the weekend, a cash-connected CBOT broker said.

 

Bullish fundamentals remained an underpinning theme, but after a six-week rally, the market was getting a little ahead itself, Nelson said. With uncertainties surrounding Argentina crops, 2009 U.S. plantings and the sustainability of U.S. export demand, traders reduced some risk heading into the weekend, Nelson added.

 

Nearby futures set 6-month highs in early action, with news of fresh export sales to China and lack of bearish outside market influences providing support to keep the bullish theme flowing. However, the exhaustion of buying and ideas the market has factored in its bullish factors set the stage for the prices retreat.

 

Nevertheless, much of the reason for the recent rally in U.S. old crop soybean futures is the combination of declining 2009 Argentina soybean production as well as the country's political problems and stronger than average soybean purchases by China of U.S. soybeans. Until that scenario changes, futures are expected to remain firmly underpinned.

 

Despite Friday's setback, the nearby May future still ended the week 44 cents higher.

 

Meanwhile, the U.S. Department of Agriculture announced Friday that private exporters reported the sale of 275,000 metric tonnes of soybeans to unknown destinations. Of that total, 55,000 tonnes are for delivery in the 2008-09 marketing year and 220,000 tonnes are for delivery in the 2009-10 marketing year.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal stumbling in unison with soybeans on end-of-week profit taking following an initial spike to nearly 7-month highs in the nearby May future. Soyoil futures consolidated Friday, finding support from adjustments in the meal/oil spread relationship and overall strength in world vegoil markets, analysts said.

 

May oil share ended at 36.03%. The May soybean crush ended at 72 cents.