May 5, 2009

 

CBOT Soy Review on Monday: Mixed; grain weakness sparks profit taking

 

 

Chicago Board of Trade soybean futures ended mixed Monday, with spillover weakness from neighboring grains applying mild pressure to temper the market's bullish old crop fundamental and technical support.

 

CBOT May soybeans ended 13 1/4 cents higher at US$11.15 1/4, July soybeans settled 12 1/2 cents higher at US$11.03 1/2 and November soybeans finished 1/2 cent lower at US$9.70 1/2.

 

July soy meal settled US$2.80 higher at US$344.80 per short tonne. July soyoil finished 49 points higher at 38.24 cents per pound.

 

Tight old crop carryout estimates, strong Chinese demand and declining Argentina production forecasts served as underpinning features in the market, said John Kleist, broker/analyst with Allendale Inc.

 

Argentina is the world's third-largest producer of soybeans and the global leader in soyoil meal and soyoil exports.

 

Futures initially spiked to new seven-month and 2009 calendar year highs.

 

However, the inability of the market to generate follow-through buying near the highs attracted selling pressure, with losses in corn and wheat enticing participants to book some profits, Kleist said.

 

Meanwhile, private weather forecasts adding rain to U.S. Midwest crop areas later this week put pressure on deferred, new crop contract months. The rains raised fears of corn seeding delays that could potentially lead to some corn acres shifting to soybeans.

 

T-storm Weather said scattered showers and thunderstorms will occur at times in the U.S. corn belt through Friday, but amounts mostly remain light. Beginning late this weekend, one of two scenarios occurs. Either a small wave of energy will interact with high humidity to develop widespread thunderstorms across the corn belt Sunday and Monday, or cool air will block thunderstorms from forming until later next week.

 

Deferred months lost ground to nearby contracts on bull spreads for the fourth consecutive trading day.

 

The July/November spread widened to US$1.33 a bushel, up from Friday's settlement of US$1.20.

 

Despite a setback from initial highs on weakness in corn and wheat, soybeans remain firmly underpinned fundamentally and on technical charts. "Soybeans will continue to be the first to find support if support is to be found in grain and oilseed markets," Kleist said.

 

Monday at 4:00 p.m. EDT, U.S. Department of Agriculture will release its weekly crop progress report. Traders and analysts expect soybean plantings will fall within a range of 6% to 10% complete as of Sunday.

 

 

SOY PRODUCTS

 

Soy product futures finished higher, feeding off the support from soybeans and supportive underlying export demand. Soyoil futures regained product share on adjustments in the meal/oil spread relationship. Support from higher crude oil futures aided soyoil's price strength as well.

 

July oil share ended at 35.75%. The July soybean crush ended at 75 3/4 cents.