July 10, 2009

 

CBOT Soy Review on Thursday: Higher on exports; short-covering bounce

 

 

Chicago Board of Trade soy futures surged Thursday, rebounding from recent losses, on support from strong export sales.

 

August soys were up 32 1/2 cents at US$10.47 1/2 a bushel, and November soys ended up 24 cents at US$9.16. August soyoil ended up 48 points at 32.73 cents a pound, and August soymeal ended up US$8.70 at US$347 a short tonne.

 

The market was oversold and due for a bounce, analysts said.

 

"I think the easiest thing you can say is we had a short-covering bounce and exports gave us support," said Chad Henderson, an analyst with Prime Ag Consultants.

 

Strong weekly export sales, particularly to China, underscored the tight U.S. supply situation as the trade looked ahead to Friday's supply-and-demand report, analysts said.

 

Rumors of Chinese buying drying up are "confounded by the facts," said Bill Nelson, an analyst at Doane Advisory Services.

 

"I think the market is sensing it probably overdid it to the downside," Nelson said.

 

Some analysts said a weaker dollar lent support to soy and other commodities.

 

Nelson said weather remains favorable for the crop, although a floor trader noted potentially more threatening weather in the extended forecast.

 

Nelson also said cash prices remain weak, but that basis should soon improve based on the strong export sales.

 

Still, the August contract is down more than US$1 on the week, Henderson said.

 

"No matter how bullish you'd want to be based on the tight ending carryouts, this past week's trade really has to shake your confidence," Henderson said.

 

The USDA will issue a supply-and-demand report at 8:30 a.m. EDT (1230 GMT) on Friday.

 

Funds sold an estimated 5,000 contracts of soys, 1,000 soymeal contracts and 2,000 soyoil contracts on Thursday.

 

Henderson said the price relationship between soys and corn is currently out of proportion, and that either corn is too cheap or soys are too high in new crop months. December corn ended at US$3.40 Thursday, but should be closer to US$3.70 or US$3.80 based on soy prices, he said.