December 22, 2009

 

CBOT Soy Review on Monday: Beans extend correction to one-month lows

 

 

Soy futures on the Chicago Board of Trade ended lower Monday, dropping to one-month lows as the market continues to correct from prior gains.

 

CBOT January soys ended 11 cents lower at US$10.01 and March soys settled 11 1/2 cents lower at US$10.08 1/2.

 

Speculative funds were estimated sellers of 4,000 lots in soys.

 

The erosion of prices is pretty well marked by liquidation in the January contract, as traders square positions ahead of end-of-year holidays, said John Kleist, broker-analyst with Allendale Inc.

 

The reversal of the U.S. dollar and subsequent slide in crude oil and metal futures provided outside weakness to extend the bearish theme in the market.

 

Lingering concerns about the 40% of export sales to China that remain unshipped and vulnerable to the origin of the sales being switched to South America amid favorable growing conditions in Argentina and Brazil added to the losses, Kleist said.

 

Technical weakness played a key role in the declines as well, with prices slipping below the November upside breakout on technical charts, he added. The spot-month January contract is targeting support at the US$10-a-bushel level.

 

Futures experienced choppy, two-sided preholiday trade for most of the day, with many traders anticipating the subdued action will continue through next week, as markets settle into the holiday doldrums.

 

The DTN/Meteorlogix weather forecast said a brief round of hot weather that developed over southern Brazil late last week should weaken and move off by the end of this week. There are no significant weather concerns for Brazilian crops at this time, Meteorlogix said.

 

Meanwhile, heavy rains hit many areas of Argentina during the weekend. While this will mostly provide adequate to surplus moisture for crops, it also likely means some serious flooding in some locations, Meteorlogix said.

 

The U.S. Department of Agriculture, along with other federal agencies, was closed Monday because of a storm that dumped heavy snow on Washingtonne. As a result, the weekly export inspections report, normally released Mondays, will be delayed until Tuesday at 11 a.m. EST, the agency said in a statement.

 

CBOT markets will have a holiday-shortened trading week, with markets closing at 1 p.m. EST Thursday and remaining closed Friday in observance of Christmas Day.

 

 

Soy Products

 

Soy product futures ended lower, retreating in unison with weakness in soys. Soyoil futures managed to gain product value share despite the declines, finding support from the unwinding of meal/oil spreads, analysts said.

 

January soymeal ended US$4.60 lower at US$300.80 a short tonne, while March soymeal settled US$4.30 lower at US$295.90. January soyoil finished 5 points lower at 38.25 cents a pound, while March soyoil ended 6 points lower at 38.68 cents.

 

January oil share was 38.9% while the January soy crush ended at 81 1/2 cents.

 

Speculative funds were estimated sellers of 1,000 lots in soymeal.