December 15, 2009

 

CBOT Soy Review on Monday: Beans: set 1-week high, demand underpins

 

 

Chicago Board of Trade soy futures ended higher Monday, bouncing to one-week highs, supported by strong underlying demand, weakness in the U.S. dollar and technical buying.

 

CBOT January soy ended 8 cents higher at US$10.35, and March soy settled 7 1/4 cents higher at US$10.43.

 

Speculative funds were estimated buyers of 6,000 lots in soy, 2,000 lots in soymeal and 1,000 lots in soyoil.

 

Bullish demand fundamentals remain the underpinning feature of the market, and with traders anticipating a fund-reallocating buying push heading into the New Year, sellers are taking a cautious approach, analysts said.

 

Technical buying aided the advances, with gains accelerating once the active January contract pierced chart resistance at Friday's highs.

 

Another week of solid weekly export inspections and a higher-than-expected November crush report provided the fundamental spark to keep buyers enthused, analysts said. The demand and weak dollar were enough to overshadow the bearish influence of news that China was planning to release soy and vegoil supplies from their reserves to cap rising prices.

 

The China news added a little intrigue to the market, but not enough to change the overall outlook for prices, analysts added. Nevertheless, traders remain concerned about the potential for export demand to shift to Brazil and Argentina barring a weather problem in South America.

 

T-storm Weather said thunderstorms will erupt in Argentina late Friday and Saturday, providing a helpful soil moisture boost to central and southern growing areas. Rainfall has been abundant across key areas of Brazil in recent weeks and a turn toward dryness is not foreseen over the next 10 days.

 

U.S. Department of Agriculture reported 53.608 million bushels of soy were inspected for export in the week ended Dec. 10. The National Oilseed Processors Association reported 160.3 million bushels of soy were crushed in November, reflective of the strong export program for soy products.

 

 

Soy Products

 

Soy product futures ended higher, with soymeal leading the advances on strong underlying demand and spillover support from soy. Soyoil futures edged higher, but lost product share on spreads. Underlying weakness in crude oil futures and adjustments in the meal/oil spread relationship amid solid demand fundamentals for soymeal served as the catalyst for movement in the spread, analysts said.

 

Meanwhile, December contracts quietly expired at 1 p.m. EST.

 

December soymeal ended US$12.00 higher at US$326.50 per short tonne, while March soymeal settled US$9.70 higher at US$306.50. December soyoil finished 18 points higher at 39.40 cents per pound, while March soyoil ended 6 points higher at 39.63.

 

January oil share was 38.52 while the January soy crush ended at 76 1/2 cents.