December 24, 2009

 

CBOT Soy Review on Wednesday: Ends higher, consolidates after recent setbacks

 

 

Soy futures on the Chicago Board of Trade ended higher Wednesday, staging a modest consolidation of the losses incurred in the previous four trading days.

 

CBOT January soy ended 10 1/4 cents higher at US$10.01 1/4 and March soy settled 10 1/2 cents higher at US$10.09.

 

Speculative funds were estimated buyers of 3,000 lots in soy.

 

The market managed to bounce off recent lows that futures had encountered on year-end profit taking in recent days, said Tim Hannagan, analyst with PFGBest in Chicago.

 

Solid underlying export demand, weakness in the U.S. dollar and a sharp bounce in crude oil futures fostered a psychological boost to underpin prices as well, Hannagan said.

 

Technical buying was featured also, with traders targeting the US$10 level ahead of Thursday's expiration of options on January soy. Bottom picking on assumptions that index funds will reallocate money into commodities to start the New Year aided the advances, traders said.

 

Otherwise, activity was light with many participants unwilling to take on added risk ahead of the holidays in low volume trade. The market retraced Tuesday's declines, as improved weather conditions for South American crops point to record output for Brazil and Argentina as well as the potential for increased export competition for the U.S.

 

The DTN/Meteorlogix weather forecast said major crop areas in Brazil 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.

 

The U.S. Department of Agriculture is scheduled to release its weekly export sales report at 8:30 a.m. EST Thursday. Analysts surveyed by Dow Jones Newswires estimate soy sales for the week ended Dec. 17 to be in the range of 950,000 to 1,250,000 metric tonnes. Soymeal export sales are seen between 175,000 and 300,000 tonnes, while soyoil sales are pegged between 15,000 and 25,000 tonnes.

 

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 higher, rebounding from prior losses along with soy. Bullish outside market influences attracted speculative buying, with traders covering recent shorts ahead of the holidays. Soymeal gained product share value over the course of the day, as bearish November stock data for soyoil encouraged meal/oil spread adjustments, analysts said. Soymeal was faced with larger-than-expected stocks in the Census Crush report as well, but after recent declines the market was overdue to consolidate, a CBOT floor trader said.

 

January soymeal ended US$5.40 higher at US$303.90 a short tonne, while March soymeal settled US$4.70 higher at US$298.80. January soyoil finished 3 points higher at 38.08 cents a pound, while March soyoil ended 3 points higher at 38.48.

 

January oil share was 38.66 while the January soy crush ended at 86 1/4 cents.

 

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