December 19, 2009

 

CBOT Soy Review on Friday: Extends losses on profit-taking

 

 

Chicago Board of Trade soy futures extended losses Friday on profit-taking and amid talk of strong production in South America, analysts said.

 

Nearby January soy ended 10 cents lower at US$10.12 per bushel, down 23 cents on the week. March soy fell 10 cents to US$10.20.

 

Soy are the market that probably has "the most room to correct to the downside" after rising on strong demand from China and supply worries, said Tom Leffler, owner of Leffler Commodities. Commodity funds sold an estimated 4,000 contracts, traders said.

 

Talk of good growing conditions and production potential in South America added pressure, they said. January soy will likely slip below US$10 if solid crop reports continue, Leffler said.

 

In the U.S., private analytical firm Informa Economics pegged 2009-10 soy production at 3.42 billion bushels, up from its November estimate of 3.333 billion and 102 million bushels more than the U.S. Department of Agriculture's November forecast.

 

Informa projected that soy acreage in 2010 will fall slightly to 77 million from 77.5 million in 2009. The firm's estimates were nothing "for anybody to get excited about," Leffler said.

 

Trading should be choppy through the end of the year as the remaining two weeks will be abbreviated by Christmas and New Year's, traders said.

 

In other news, the USDA said private exporters had sold 116,000 tonnes of U.S. soy to China for delivery during the 2010-11 marketing year, which begins next September. It was the third sale of U.S. soy to China announced this week but wasn't as supportive as the other two, which were for delivery in 2009-10, an analyst said.

 

 

Soy Products

 

CBOT soy product futures finished weaker with soy. Profit-taking weighed on the complex ahead of the end of the year, an analyst said. Commodity funds sold an estimated 2,000 soyoil contracts and 1,000 soymeal contracts.

 

January soymeal fell US$2 to US$305.40 per short tonne. January soyoil lost 31 points to 38.33 cents per pound

 

Soyoil weakened even though crude oil was stronger. Rising crude oil prices often set a bullish tonnee for soyoil. Strength in the U.S. dollar helped encourage weakness in the soy complex, an analyst said. A strong dollar makes U.S. commodities less attractive to foreign buyers.