December 25, 2009

 

CBOT Soy Review on Thursday: Soy slip on technical sales in thin trade

 

 

Chicago Board of Trade soy futures ended lower Thursday, retreating from earlier gains on light technical selling in thin holiday trade.

 

CBOT January soy ended 1 3/4 cents lower at US$9.99 1/2, and March soy settled 1 cent lower at US$10.08.

 

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

 

The inability of futures to mount a sustained upside push on strong export sales coupled with bearish South American crop outlooks served as catalysts to keep buyers on the defensive, analysts said.

 

The unwillingness of traders to take on added risk in an abbreviated trading session ahead of Friday's Christmas holiday applied pressure to keep prices chopping around near unchanged levels.

 

Futures were initially propelled by higher-than-expected weekly export sales, a sign that demand hasn't wavered, with China remaining a featured buyer of U.S. supplies. Weakness in the U.S. dollar coupled with strength in crude oil futures provided psychological support to underpin prices as well.

 

However, once active contracts failed to challenge overhead resistance on technical charts, buyers began to lose enthusiasm, analysts said. Fears of export demand shifting to Brazil and Argentina in early 2010 based on rising South American production forecasts generated light weakness to send futures into the holiday weekend on the defensive as well.

 

The U.S. Department of Agriculture reported total weekly soy export sales were a net 1,369,100 metric tonnes for the week ended Dec 17. Sales of 1,195,600 were sold for delivery in the 2009-10 marketing year, with the primary buyer China with 633,300 tonnes. Analysts had forecast sales between 950,000 and 1,250,000 metric tonnes.

 

The DTN Meteorlogix weather forecast said major southern crop areas of Brazil will see increasing coverage of showers and thunderstorms during the next three to five days, maintaining favorable conditions for crops. Northern crop areas look drier and hotter for a while but should eventually get back into some rain.

 

Across Argentina, periodic scattered shower and thunderstorm activity will maintain favorable growing conditions for most summer crops, Meteorlogix said.

 

CBOT markets will be closed Friday in observance of the Christmas Day holiday.

 

 

Soy Products

 

Soy product futures ended mixed, with soyoil gaining product-share value versus soymeal on adjustments in the meal/oil spread relationship. Soyoil was buoyed by strong weekly export sales, spillover strength from crude oil futures and optimistic outlooks for the U.S. government to extend the biodiesel blenders' tax credit in early 2010, analysts said. Soyoil is the primary U.S. feed stock for biodiesel.

 

January soymeal ended US$2.50 higher at US$301.40 per short tonne, while March soymeal settled US$2.50 lower at US$296.30. January soyoil finished 38 points higher at 38.46 cents per pound, while March soyoil ended 38 points higher at 38.86.

 

January oil share was 39.03 while the January soy crush ended at 86 3/4 cents.

 

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

 

USDA reported soyoil commitments at 46,700 metric tonnes. Analysts had forecast sales between 15,000 and 25,000 tonnes.