December 23, 2009

 

CBOT Soy Review on Tuesday: Continues downward trend on technical selling

 

 

Chicago Board of Trade soy futures ended lower Tuesday, continuing the market's downward slide on technically inspired selling.

 

CBOT January soy ended 10 cents lower at US$9.91 and March soy settled 10 cents lower at US$9.98 1/2.

 

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

 

"The market experienced another low volume session of liquidation, pressured by bearish technical considerations," said Jerry Gidel, analyst with North America Risk Management Services.

 

Futures set another low for the current downtrend, dropping to five-week lows, as the ability of active contracts to penetrate support at the psychological US$10.00 per bushel level on technical charts uncovered pre-placed sell orders, analysts said.

 

Improved weather conditions for South American crops added to the defensive theme, as the market turns its attention to record global production prospects.

 

Chinese buying had underpinned futures through the autumn, but worries that Chinese demand will shift to the southern hemisphere, as long as weather helps promote record crops in Brazil and Argentina, took the edge off prices, analysts added.

 

Meanwhile, the exhaustion of buying as the market attempts brief consolidation bounces continued to attract selling in thin holiday trade.

 

The DTN Meteorlogix weather forecast said Brazil's major crop areas will see increasing coverage of showers and thunderstorms during the next three to five days, maintaining favorable conditions for crops.

 

Periodic scattered shower and thundershower activity will maintain favorable growing conditions for most summer crops in Argentina, Meteorlogix added.

 

On tap for Wednesday, the U.S. Census Bureau is expected to estimate the November soy crush at 168.4 million bushels, up from the prior month, as strong soy product demand propelled daily crush rates, according to a survey of industry analysts. The Census Bureau's crush report is scheduled for release Wednesday at 8 a.m. EST (1300 GMT).

 

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 the Christmas Day holiday.

 

 

Soy Products

 

Soy product futures settled lower, drifting in unison with declines in soy. The absence of fresh supportive fundamental news, technical weakness and pressure from outside markets weighed on prices, analysts said.

 

January soymeal ended US$2.30 lower at US$298.50 per short tonne, while March soymeal settled US$1.80 lower at US$294.10. January soyoil finished 23 points lower at 38.05 cents per pound, while March soyoil ended 23 points lower at 38.45.

 

January oil share was 39.04 while the January soy crush ended at 84 1/4 cents.

 

Speculative funds were estimated sellers of 1,000 lots in soymeal, and 2,000 lots in soyoil.