May 21, 2009

 

CBOT Soy Review on Wednesday: End up; spread unwinding featured

 

 

Soybean futures at the Chicago Board of Trade ended higher Wednesday, but the unwinding of bull spreads was the featured attraction of the day.

 

CBOT July soybeans settled 7 cents higher at US$11.69 and November soybeans finished 18 1/2 cents higher at US$10.14 1/2.

 

July soy meal settled US$0.80 higher at US$374.80 per short tonne. July soyoil finished 20 points higher at 38.37 cents per pound. In pit trades, speculative fund buying was estimated at 3,000 lots in soybeans, and 1,000 lots in soyoil.

 

Bullish market sentiment continued to buoy prices, but the old, new crop spread gave up some ground after strong gains in the past month, said Gavin Maguire, director of research at e-Hedger in Chicago.

 

The unwinding of the July/November spread propped up the back end of the market. Weather forecasts calling for good planting weather in the Midwest open the door for meaningful corn plantings in the next few days, possibly limiting the amount of corn acres that would switch to beans.

 

That's supportive to deferred soybean futures, Maguire said.

 

The July/November spread settled at US$1.54 1/2 a bushel, down from Tuesday's settlement of US$1.66.

 

Nearby soybean contracts initially spiked to new highs for the year, as the tight availability of old crop supplies remained underlying drivers of the market's bullish trend.

 

However, as the day unfolded, profit taking moved into the equation, as traders viewed current supplies as tight enough to warrant the recent rally in prices, but a push above US$12.00 a bushel is questionable at this point, Maguire said.

 

Looking ahead, traders will eye Thursday's weekly export sales report for clues that higher prices are rationing demand and that will shape near-term market opinions, Maguire said.

 

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 14 in a range of 500,000 to 850,000 metric tonnes. Soymeal export sales are seen between 200,000 and 300,000 tonnes, while soyoil sales are pegged between 10,000 and 30,000 tonnes.

 

In other news, prospects for Argentina's 2008-09 soybean production continue to decline as the extent of drought damage becomes more clear, the Buenos Aires Cereals Exchange said in its weekly crop report Wednesday. The exchange trimmed its forecast for soy production to 32.2 million metric tonnes, down 600,000 tonnes from last week's estimate.

 

 

Soy Products

 

Soy product futures ended higher, but settled well off earlier highs. The markets succumbed to profit taking, following the lead of soybeans. Soymeal experienced the unwinding of bull spreads like soybeans, as the markets took a breather after an aggressive upward push in nearby contracts in the past month, analysts said.

 

July oil share ended at 33.84%. The July soybean crush ended at 77 3/4 cents.