May 14, 2009

 

CBOT Soy Review on Wednesday: Set new uptrend highs on fundamentals

 

 

Soybean futures on the Chicago Board of Trade climbed Wednesday, rallying to 7 1/2 month highs, extending the current uptrend on bullish fundamentals and supportive technicals.

 

CBOT May soybeans ended 12 1/2 cents higher at US$11.50, July soybeans settled 10 1/2 cents higher at US$11.28 and November soybeans finished 2 cents higher at US$9.81 1/2.

 

July soy meal settled US$5.80 higher at US$352.50 per short tonne. July soyoil finished 52 points lower at 39.16 cents per pound.

 

Very tight old crop inventories coupled with strong export demand from China, shrinking South American soy crop prospects and slow planting progress served as catalysts to keep futures in a bullish uptrend, analysts said.

 

Technically motivated buying aided the advances, with speculative buyers coming aboard as prices rose to new highs for the market's two-month uptrend, traders said.

 

A bullish fundamental base remains the driver of prices, enticing traders to add risk premium to prices in an effort to curtail consumption.

 

Old/new crop bull spreads were featured once again, with the rise in old crop prices widening the July/November spread to a new high.

 

The July/November spread settled at US$1.46 1/2 a bushel, up from Tuesday's settlement of US$1.38.

 

In news, Argentina's 2008-09 soybean production will total 32.8 million metric tonnes, the Buenos Aires Cereals Exchange said in its weekly crop report Wednesday. The estimate is down from 34 million tonnes forecast last week.

 

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 May 7 in a range of 350,000 to 800,000 metric tonnes. Soymeal export sales are seen between 100,000 and 300,000 tonnes, while soyoil sales are pegged between 10,000 and 25,000 tonnes.

 

National Oilseed Processors Association report on the April soybean crush is scheduled to be released Thursday at 8:30 a.m. EDT (1230 GMT). The April crush is expected to drop to about 133.8 million bushels from 137.3 million in March. NOPA soyoil stocks in April are expected to decline to 2.548 billion pounds, down from 2.593 billion pounds in March.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal gaining product share on adjustments in the meal/oil spread relationship. Soymeal was supported on spreads amid solid underlying export demand, and outlooks for a continued strong export base as Argentina crop forecasts continue to decline, analysts said.

 

Argentina is the world's third largest producer of soybeans behind the U.S. and Brazil, but is the global leader in soymeal and soyoil exports.

 

Soyoil futures stumbled on inter-product spreading, with weakness in crude oil futures attracting selling interest as well, traders said.

 

July oil share ended at 35.75%. The July soybean crush ended at 78 1/4 cents.