November 21, 2009

 

CBOT Soy Review on Friday: Soybeans extend rally, funds enthused by demand

 

 

Strong export demand and investment buying lifted soybean futures at the Chicago Board of Trade soybean futures Friday.

 

CBOT January soybeans ended 7 cents higher at US$10.46, and March soybeans settled 5 1/2 cents higher at US$10.50 1/4. On the week, January soybeans gained 6%.

 

In pit trades, speculative funds were estimated buyers of 4,000 lots in soybeans, sellers of 1,000 lots in soymeal and buyers of 2,000 lots in soyoil.

 

Soybean prices have been rising, even in the face of harvest. It's unusual to see soybeans rise in the autumn because fresh supply comes as the Midwestern harvest comes on full swing. During this time, soybean demand has kept a floor under prices. Friday, investors bullish on soybeans bought futures on perceptions that demand for U.S. soybeans is greater than what the market expected, said Tim Hannagan, analyst with P.F.G. Best in Chicago.

 

Strong exports and domestic crushing has sparked some more optimistic views on 2009-10 soybean marketing year demand. China's strong appetite for U.S. soybeans remains the key to the market's rise in prices. The absence of export competition from South American suppliers until early 2010, when Brazil and Argentina crops begin to move into the world pipeline, is expected to keep prices underpinned.

 

Despite the strong export business, Karl Setzer, analyst at MaxYield Cooperative, is cautious about getting very excited for future sales. "Much of this business is from the weak value of the U.S. dollar rather than traditional demand though, which brings into question future sales potential," he said.

 

The allocation of investment money into the commodity remains a supportive feature. Bearishness from strength in the U.S. dollar was cast aside, as sellers remain cautious participants as the demand outlook remains attractive to speculative buyers, said Gavin Maguire, director of research at e-Hedger in Chicago.

 

For the current 2009-10 marketing year, U.S. soybean export sales are up 59% from last year, compared to U.S. Department of Agriculture expectations of a 3.3% increase. The marketing year began Sept. 1.

 

Since Sept. 1, total U.S. soybean export commitments total 26.031 million metric tonnes, with China accounting for 15.844 million of the sales.

 

SOY PRODUCTS

 

Soy product futures ended mixed, with the unwinding of meal/oil spreads a featured attraction. Soymeal futures ended lower, succumbing to profit-taking pressure after running into resistance at three-month highs. After rising to August highs, the market took a break, catching its breath heading into the weekend, said Mike Zuzolo, analyst Global Commodity Analytics and Consulting.

 

Soyoil futures ended higher, benefitting from the selling in soymeal, with adjustments in the meal/oil spread allowing the market to withstand weakness from crude oil futures.

 

December soymeal ended US$1.30 lower at US$317.10 per short tonne, and December soyoil finished 26 points higher at 39.71 cents per pound.

 

December oil share was 38.49 while the January/December soybean crush ended at 78 cents.