May 12, 2009

 

CBOT Soy Review on Monday: Bounce off early lows; fundamental support

 

 

Soybean futures on the Chicago Board of Trade ended higher Monday, managing to recover from an early setback on bullish underlying fundamentals.

 

CBOT May soybeans ended 4 cents lower at US$11.30, July soybeans settled 4 1/2 cents higher at US$11.16, and November soybeans finished 3 1/2 cents higher at US$9.83.

 

July soy meal settled US$2.90 higher at US$344.40 per short tonne. July soyoil finished 3 points lower at 39.58 cents per pound.

 

Razor-tight old crop inventories and outlooks for tight new crop ending stocks provided the fundamental support to underpin prices, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Strong technical support beneath the market and weather forecasts that will make it a struggle for farmers to make any measurable near-term planting progress in the eastern Midwest aided the recovery as well, Roose said.

 

Futures initially stumbled to double-digit losses as weakness in outside markets and news of the first case of the H1N1 virus detected in China sent jitters through the marketplace.

 

Traders said fear of reduced feed demand in China spooked market bulls early on. However, futures made an impressive recovery as the session unfolded.

 

The ability of active contracts to hold support on technical charts, and the absence of any proof of a slowdown in demand encouraged traders to add risk premium to prices heading into Tuesday's supply and demand reports, Roose said.

 

Industry watchers expect U.S. Department of Agriculture's May supply and demand report will reveal higher old-crop exports which will cut ending stocks. The average of analysts' estimates surveyed by Dow Jones Newswires project 2008-09 marketing year see ending stocks at 130 million bushels from a range of 86 million to 148 million bushels.

 

New-crop traders will look to see what yield USDA uses to help determine production. They expect USDA will use a normal harvested percentage of the March 31 prospective plantings estimate. The average of analysts' estimates surveyed by Dow Jones project 2009-10 marketing year ending stocks at 239 million bushels from a range of 148 million to 528 million bushels.

 

The USDA's report is scheduled for release at 8:30 a.m. EDT (1230 GMT) Tuesday.

 

Monday at 4 p.m. EDT, the USDA will report planting progress for U.S. soybeans, with analysts anticipating seedings in a range 14% to 22% complete.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal climbing on support from a turnaround in soybeans and adjustments in the meal/oil spread relationship, analysts said. Soyoil ended well off its session lows, but the combination of weakness in crude oil futures and inter product spreading limited its recovery, a CBOT floor analyst said.

 

July oil share ended at 36.47%. The July soybean crush ended at 77 cents.