December 11, 2009

 

CBOT Soy Review on Thursday: Beans stumble on profit taking

 

 

Chicago Board of Trade soy futures ended lower Thursday, stumbling on pressure from profit taking as bullish traders were disappointed by a smaller-than-expected cut in U.S. soy ending stocks.

 

CBOT January soy ended 1 1/2 cents lower at US$10.27, and March soy settled 2 cents lower at US$10.35 3/4.

 

Speculative funds were estimated sellers of 2,000 lots in soy, 1,000 lots in soymeal, while net buyers of 2,000 lots in soyoil.

 

The market had gotten long soy in anticipation the U.S. Department of Agriculture would trim ending stocks more than the 15 million reported, leaving bullish traders without something to lean on, said Tim Hannagan, analyst with P.F.G. Best.

 

Speculative profit taking surfaced after initial gains failed to attract follow through buying, with the unwinding of long soy/short corn spreads aiding the defensive theme.

 

Overall activity was light, with the market extending its correction from prior highs amid the absence of a surprise in USDA report. However, downside risk remained limited by a strong underlying demand situation, with solid weekly export sales and outlooks for further tightening of the soy balance sheet in January underpinning prices.

 

The December supply/demand report was a yawner, but it gave a better idea for what the USDA will do in January, Hannagan added.

 

U.S. soy ending stocks were pegged at 255 million bushels, down from the USDA's November estimate of 270 million, but above the average analyst estimate of 235 million bushels. In the supply/demand balance sheet, the government raised its export estimate by 15 million bushels to 1.340 billion bushels.

 

USDA reported total weekly soy export sales were a net 920,100 metric tonnes for the week ended Dec 3. The primary buyer was China with 613,700 tonnes. Analysts had forecast sales between 600,000 and 900,000 metric tonnes. USDA reported 2,067,300 metric tonnes were shipped in the week ended Dec. 3, up 59% from the previous week and 18% from the prior four-week average.

 

 

Soy Products

 

Soy product futures ended mixed, with soyoil gaining product value share on adjustments in the meal/oil spread relationship. Soyoil managed to consolidate its early slide to three-week lows, benefitting from profit taking pressure in soymeal futures.

 

However, losses in soymeal were capped by strong export demand, reflective of a net 304,200 tonnes soymeal sales reported for the week ended Dec. 3 by USDA. Trade estimates ranged from 100,000 to 175,000 tonnes.

 

December soymeal ended US$1.10 lower at US$313.10 per short tonne, while March soymeal settled unchanged at US$305.60. December soyoil finished 19 points higher at 39.09 cents per pound, while March soyoil ended 18 points higher at 39.45.

 

January oil share was 39.28 while the January soy crush ended at 79 1/4 cents.