December 8, 2009

 

CBOT Soy Review on Monday: Rallies on strong demand, China markets

 

 

Soy futures on the Chicago Board of Trade ended higher Monday, rallying on strong Chinese markets, prospects for tightening 2009/10 U.S. soy end stocks on Thursday's crop report, and bullish world demand.

 

CBOT January soy ended 10 cents higher at US$10.53, and March soy settled 10 1/2 cents higher at US$10.61.

 

In pit trades, speculative funds were estimated buyers of 5,000 lots in soy, 1,000 lots in soymeal, and 2,000 lots in soyoil.

 

The market was supported from the outset by overnight strength in Chinese soy markets, with outlooks for large imports in the near term feeding bullish enthusiasm, said Jack Scoville, an analyst with Price Futures Group in Chicago.

 

The supportive theme was consistent, with weekly export inspections revealing another week of strong exports to China, and outlooks for a tighter balance sheet in Thursday's supply and demand report keeping prices underpinned.

 

However, old/new crop spreading was featured as well, with deferred contracts well off the gains seen in nearby contracts.

 

"The bullish news in the market is front loaded to nearby contracts, as the market understands when South American crops start maturing, demand will shift to origins in the southern hemisphere," Scoville said.

 

The bullish theme allowed futures to divorce themselves from weakness in other commodities, with neighboring grain, crude oil and metal futures all posting losses on the day.

 

U.S. Department of Agriculture reported 58.284 million bushels of U.S. soy were inspected for export in the week ended Dec 3. Analysts had expected inspection in a range of 41 million to 55 million bushels. The primary destination for exports was China with 38.298 million.

 

USDA will release its December supply and demand report Thursday, 8:30 am EST. The average estimate of analysts surveyed by Dow Jones Newswires peg U.S. soy 2009/10 ending stocks at 235 million bushels, down from the November USDA forecast of 270 million bushels.

 

 

Soy Products

 

Soy product futures ended higher across the board, up in unison with soy. Soyoil futures bounced, shaking off the bearish influence of weak crude oil futures on the unwinding of meal/oil spreads and bullish outlooks for world vegoil demand, analysts said.

 

Soymeal futures ended higher, but proved to be the weakest link in the soy complex. Profit-taking on long meal/short soyoil spreads limited advances in the market, traders said. However, good underlying demand continued to serve as an underpinning feature in the market.

 

December soymeal ended US$0.50 higher at US$321.40 per short tonne, while March soymeal settled at US$1.70 higher at US$312.40. December soyoil finished 55 points higher at 40.31 cents per pound, while March soyoil ended 54 point higher at 40.67.

 

January oil share was 39.5 while the January soy crush ended at 81 1/2 cents.