Global soy prices seen steady on short covering
Global soy prices are likely to remain steady this week on strong demand and congestion at South American ports, trading executives said Friday (April 16).
"There is buying interest coming from some origins and this can help hold prices steady," said a Tokyo-based trading executive. He said short-term supply delays from South America are also supporting soy prices due to logistical problems.
The May soy futures contract on the CBOT settled 15 cents or 1.55% higher Thursday (April 15) at US$9.84 a bushel.
Traders said at a time when prices were expected to fall towards US$9 a bushel following a bumper soy crop in South America, they have smartly rallied due to slow outflow from the region.
Short covering in futures was another factor contributing to the rise in prices, they said.
Fundamentally it has been a tussle between short-term bullishness due to port congestion in South America and long-term bearishness due to the size of the crop coming out of Brazil and Argentina, according to reports.
It said there could be a rally in the CBOT May futures contract due to short covering by speculative investors in the run-up to the expiry.
According to the report, there are still 90,000 outstanding contracts in CBOT soy May futures and speculative investors are still net short by some 50,000 contracts across all tenors.
Traders expect stronger gains in the front months because of short covering, though there may be some selling pressure on the July contract due to the rollover of shorts.
The inventory level of soy is high in China but some purchases continue to be made, said a Singapore-based trading executive. In the physical market, Taiwan has also been actively buying soy.