Chicago Board of Trade soybean futures closed firm on Monday as the market tried to recover from oversold technicals after dropping below $5 for the first time in 2-1/2 years last week, traders said. March soybeans settled 1-3/4 cents higher at $5.01-1/4, but climbed to a session high of $5.07-1/4 early. The back months closed 3/4 cent to 2 cents higher. Commodity funds hold a record net short position in CBOT soybean futures, making the market ripe for a technical bounce.
The nine-day relative strength index for March closed on Monday at 31, up from 27 on Friday. An RSI of 30 or lower is one indication of an oversold market.
Some underpinning also stemmed from concerns about dryness in Brazil's No 3 soy state of Rio Grande do Sul. It was dry over the weekend and was expected to stay dry through Wednesday.
"The question is it dry enough that we're losing enough bushels. Based on what happened today it doesn't seem like it," said James Barnett, a floor analyst with Refco Inc, as soybeans closed off their highs.
Mostly favourable weather during the growing season in Brazil and Argentina was expected to lead to a huge soybean crop this season. That capped the day's recovery, traders said.
Export business was slow with the start of the Asian Lunar New Year holiday and Carnival in Brazil, traders said.
Nearby CIF soy values at the US Gulf firmed on Monday after last week's break. Midwest cash basis bids for soybeans were mostly steady on Monday morning.
The United States Department of Agriculture said on Monday export inspections last week were 26.372 million bushels, compared with estimates for 24 million to 29 million. About half of the exports were earmarked for top buyer China.
There was some position-squaring before the United States Agriculture Department releases its monthly supply/demand reports on Wednesday.
An average of analysts' estimates pegged the 2004/05 United States soy ending stocks at 439 million bushels, just slightly higher than USDA's January estimate for 435 million.
Most of the volume stemmed from spreading as firms rolled their March positions before first notice day for deliveries on February 28.
In outright trade, funds bought about 2,500 lots. Commercials were net sellers.
The Chicago Board of Trade soy products closed mostly higher on a short-covering bounce after both markets slipped to contract lows recently, traders said.
March soymeal settled 90 cents higher at $149.70 per ton, after falling to contract lows on the open.
The deferreds were up 50 cents to down 10 cents. US cash soymeal markets continued to have a soft tone on Monday, which sparked the recent fall to contract lows, traders said.
March soyoil closed 0.04 cent lower at 19.00 cents per lb, after spending most of the session higher.
The back months were steady to up 0.04 cent higher. Early strength stemmed from a higher close in Malaysian palm oil futures on short-covering.
The Commodity Futures Trading Commission on Friday reported funds increased their heavy net short positions in soybeans, soymeal and soyoil futures during the week ended February 1.
In soybeans, large speculators were long 31,256 lots, up 4,035, and short 107,015, up 7,080 from the week before.
For soymeal futures, they were long 10,304 lots, up 1,153, and short 43,835, up 2,275 from the previous week.
And in soyoil, funds were long 22,457 futures, up 54, and short 57,439, up 6,598.
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