November 11, 2009

 

CBOT Soy Review on Tuesday: Soy losses reflect bearish USDA data

 

 

Soy futures on the Chicago Board of Trade ended lower Tuesday, pressured by the bearish influence of government crop production and supply/demand forecasts.

 

CBOT November soy finished 2 3/4 cents lower at US$9.61 1/2 per bushel, and Jan soy ended 4 cents lower at US$9.68.

 

In pit trades, speculative funds were estimated sellers of 3,000 lots in soy, and 1,000 lots each in soymeal and soyoil.

 

U.S. Department of Agriculture production forecasts served as the catalyst for lower price action, but the inability of futures to press through recent lows, coupled with support from a late bounce in corn, attracted speculative buying to trim losses, analysts said.

 

The market was able to shrug off price pressure near Monday's lows and major moving average support on technical charts on exhausted selling and fresh fund buying on breaks.

 

The USDA data for soy were generally bearish, but reports of private forecasters saying the production estimates overstate the crop amid the lack of abandonment and harvest losses incorporated into the forecast, provided light support, said Mario Balletto, analyst with Citigroup in Chicago.

 

Technically inspired buying was a feature in the market's late session rise, with futures managing to hold underlying chart support. Bullish traders were encouraged by the January contract's ability to settle above its key 50-day moving average.

 

Fundamentally, the market should be closer to US$9 bushel than US$10, but as long as speculative fund buyers find grain and oilseed futures attractive on bigger macro level themes, futures remain underpinned, said John Kleist, broker/analyst with Allendale Inc.

 

The USDA projected 2009 U.S. soy production at 3.319 billion bushels, with a yield of 43.3 bushels per acre. The production figure was above the average Dow Jones survey estimate of 3.269 billion, with yields above the average estimate of 42.7.

 

The yield is up 0.9 bushel from last month and up 3.6 bushels from 2008. If realized, this will be the highest U.S. yield on record, the USDA said in the report. Area for harvest in the U.S. is forecast at 76.6 million acres, unchanged from last month, but up 3% from 2008.

 

 

Soy Products

 

Soy product futures settled lower, retreating in unison with declines in soy. Soyoil futures ended lower, but managed to continue to recover product share on oil/meal spreads. An early rally in crude oil and a friendly supply and demand report from USDA served as the spark for the rise in oil share percentage, a CBOT floor broker said.

 

Soymeal futures stumbled with soy, pressured by speculative sales and bearish outlooks for increased availability of soy supplies for processing, analysts said.

 

December soymeal ended US$6.10 lower at US$288.20 per short tonne, and December soyoil finished 21 points lower at 37.56 cents per pound.

 

December oil share was 39.43%, while the November/December soy crush ended at 86 cents.