April 22, 2009

 

CBOT Soy Review on Tuesday: Retrace losses; fundamental, technical strength

 

 

Chicago Board of Trade soybean futures rallied Tuesday, recouping most of Monday's losses on bullish underlying fundamentals and technically inspired buying.

 

CBOT May soybeans ended 19 1/2 cents higher at US$10.38, July soybeans settled 21 1/2 cents higher at US$10.33 and November soybeans finished 28 cents higher at US$9.31.

 

July soymeal settled US$7.40 higher at US$319.30 per short tonne. July soyoil finished 68 points higher at 36.43 cents per pound.

 

The combination of fresh private export sales reported Monday and Tuesday to China in the face of tight projected old-crop ending inventories provided a firm foundation to attract commercial and speculative buyers, said Brian Hoops, president Midwest Market Solutions in Yanktonne, S.D.

 

The U.S. Department of Agriculture announced Tuesday, private exporters reported the sale of 180,000 metric tonnes of soybeans to China for delivery in the 2008-09 marketing year.

 

With 45% of Argentina's crop harvested and poor yields continuing to be reported, the U.S. remains an attractive origin for importers to satisfy their buying needs, Hoops said.

 

In the absence of any decisive moves in outside financial markets, futures were poised to find some stability after Monday's sharp declines, which were perceived to be overdone in the face of bullish market fundamentals.

 

The oversold conditions uncovered technical buying, with advances accelerating to intraday highs toward the end of the session on fresh spec buying and short covering after futures eclipsed resistance at Monday's highs on technical charts, Hoops added.

 

In pit trades, speculative fund buying was estimated at 3,000 lots.

 

Otherwise, the unwinding of some bull spreads boosted new-crop futures, as the market attempts to keep prices at levels that will secure adequate 2009 acreage to rebuild tight projected carryover inventories.

 

Looking ahead, bullish fundamentals are seen keeping prices underpinned, but aggressive moves in outside markets or a shift of China buying to South American origins would dampen bullish momentum, analysts said.

 

 

SOY PRODUCTS

 

Soy product futures rallied in unison with soybeans Tuesday. The market staged a recovery from Monday's setback on ideas the losses were overdone and technically inspired buying. Underlying export demand, stability in crude oil and tight world vegoil stocks provided added strength to soyoil futures, analysts said. Technical buying and momentum from soybeans buoyed soymeal, traders said.

 

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

 

July oil share ended at 36.39%. The July soybean crush ended at 70 1/4 cents.