April 30, 2009

 

CBOT Soy Review on Wednesday: Recoups prior losses; technical buys, outside markets

 

 

Soybean futures on the Chicago Board of Trade rallied Wednesday, recovering a lot of the ground lost in previous sessions on technical buying and outside market support.

 

CBOT May soybeans ended 44 1/2 cents higher at US$10.34, July soybeans settled 42 cents higher at US$10.25 and November soybeans finished 32 1/2 cents higher at US$9.32 1/2.

 

July soymeal settled US$16.30 higher at US$320.30 per short tonne. July soyoil finished 54 points higher at 35.73 cents per pound.

 

The absence of fresh bearish news opened the door for a technical correction following the market's recent tumble, said John Kleist, broker/analyst with Allendale Inc.

 

The market never received any confirmation from reports of China canceling prior purchases; swine-flu fears were factored into prices; outside markets were supportive; and Argentina crop estimates continued to shrink, a bullish recipe for the market, Kleist said.

 

Strength from outside markets, with higher stock and crude oil futures, and a weaker U.S. dollar coupled with tight old-crop supplies underpinned features. The uncertainty of new-crop production amid a lack of early plantings added strength to deferred months as well, analysts said.

 

Speculative buying was featured, but prices held within the week's trading range with new-crop gains limited by fears of additional soy acres amid delays to corn plantings. Speculative fund buying was estimated at 6,000 lots.

 

Wet Midwest weather is normally bearish for new-crop soybeans at this time of year, but without any early planting in the face of tight old-crop inventories, traders were encouraged to add risk premium to prices, said Don Roose, president U.S. Commodities.

 

Nonetheless, bull spreads worked well Wednesday, with the July/November spread widening to 92 1/2 cents from Tuesday's 83-cent settlement.

 

The market satisfied a near-term upside technical objective of filling a chart gap up to US$10.26 basis July futures on open outcry charts. The contract managed to settle above resistance at its 10-day moving average on charts as well.

 

The Buenos Aires Cereals Exchange slashed its forecast for 2008-09 Argentina soy production by 3 million metric tonnes Wednesday, pegging output at just 34 million tonnes. The exchange's forecast marks the lowest soy output in four years.

 

On tap for Thursday, the U.S. Department of Agriculture weekly export sales report is scheduled to be released at 8:30 a.m. EDT, and analysts surveyed by Dow Jones Newswires estimate soybean sales for the week ended April 23 in a range of 450,000 to 900,000 metric tonnes. Soymeal export sales are seen between 75,000 and 200,000 tonnes, while soyoil sales are pegged between 5,000 and 20,000 tonnes.

 

Meanwhile, analysts expect deliveries against the CBOT May soybean contract to fall in a range of zero to 100 lots, with most analysts leaning toward zero lots. No soymeal deliveries are expected, while soyoil delivery notices are expected in a range of 2,000 to 4,000 contracts. First notice day for deliveries on May futures is Thursday.

 

 

SOY PRODUCTS

 

Soy product futures leaped in unison with soybeans, energized by speculative buying and strength from outside markets. Soymeal was buoyed by technical buying and tight old-crop inventories, while soyoil fed off support from crude oil and technical buys.

 

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

 

July oil share ended at 35.87%. The July soybean crush ended at 72 3/4 cents.