November 12, 2009

 

CBOT Soy Review on Wednesday: Soy bounce on speculative buying

 

 

Soy futures on the Chicago Board of Trade ended higher Wednesday, bouncing back from prior declines on technically inspired buying.

 

CBOT November soy finished 2 1/4 cents higher at US$9.63 3/4 per bushel, and January soy ended 4 cents higher at US$9.72.

 

In pit trades, speculative funds were estimated buyers of 3,000 lots in soy, and 2,000 lots in soyoil.

 

In the absence of fresh fundamental news to drive direction, futures were influenced by renewed speculative fund buying, with spillover support from record high gold futures and higher crude oil prices attracting buyers, analysts said.

 

A lack of bearish influences added to the firm undertonnee, with near-term weather and the dollar failing to provide strong momentum for futures. Technical buying played a key role in the session's gains, as bullish traders were encouraged by the market's ability to hold underlying chart support on recent price breaks, a CBOT floor analyst said.

 

Choppy two-sided trade was seen during the day, with a midday bounce in the U.S. dollar and a brief reversal in crude oil sparking midday profit-taking to weigh on prices. The declines were short-lived however, with a bounce in crude oil and lingering uncertainty about field losses and South American plantings keeping a floor beneath the market.

 

The sideways pattern in soymeal is helping keep soy trapped in a trading range, as sluggish feed demand limits upside potential, while strong export demand remains an underpinning force, said Brian Hoops, president of Midwest Market Solutions in Yanktonne, S.D.

 

Cropcast Weather Services said dryness continues to build across western areas of Argentina's soy belt, specifically La Pampa, western Buenos Aires and Cordoba, and is beginning to spread into northeastern areas. Scattered showers in eastern Cordoba, Santa Fe and Entre Rios next week should ease any developing dryness there, but moisture shortages will continue in southern Cordoba, La Pampa and western Buenos Aires, Cropcast added in a midday forecast.

 

The U.S. Department of Agriculture's weekly export sales report, normally released Thursday, will be delayed until Friday due to the Veterans Day holiday.

 

 

Soy Products

 

Soy product futures ended higher, with soyoil taking the lead on the upward push. Soyoil futures rallied to two-week highs, buoyed by oil/meal spreading. Soyoil gained product share value, energized by good underlying demand, supportive supply/demand outlooks, generally firm tonnee from crude oil and technically inspired speculative fund buying, analysts said.

 

Soymeal futures ended with modest gains, garnering support from soy. However, the market remains trapped in a sideways pattern on technical charts, as buyers don't have a lot of incentive to push prices in the face of sluggish domestic feed demand, said Midwest Market Solutions' Hoops.

 

December soymeal ended US$0.90 higher at US$289.10 per short tonne, and December soyoil finished 81 points higher at 38.37 cents per pound.

 

December oil share was 39.96%, while the November/December soy crush ended at 93 cents.