Soyabean futures at the Chicago Board of Trade closed higher in step with a corn rally on Tuesday and on a short-covering bounce after on Monday's slide drove May to a 3-1/2 month low, traders said.
CBOT soya closed 1-1/2 to 3-1/2 cents per bushel higher, with May up 2-3/4 at $5.75-1/4. Soyabeans found some footing as the market began to look a bit oversold technically. And fund buying, which boosted the neighbouring corn market sharply higher, totalled 1,000 to 1,500 lots in soya on Tuesday.
The nine-day relative strength index for May closed on Monday at 32. A value of 30 or below is considered a sign that the market is oversold, and when that happens it often triggers at least a mild short-covering bounce. The May contract is trading below all key moving averages with first key resistance at its 20-day ma of $5.89-1/4.
Technical support in May on Tuesday was at $5.70 per bushel and resistance was at $5.75. Traders said big global stocks of vegetable oils and the lacklustre pace of US soyabean exports limited gains. Improved crop weather in the United States and bird flu concerns also restrained buying interest. Traders and analysts continued to discuss the potential for a solid soya production season this year in the United States and South America. Recent rainfall in the US Midwest will help buoy spring seedlings and brighten prospects for the 2006 US corn and soyabean crops, and crop weather remains favourable in Argentina and Brazil.
Soya exports remained quiet overnight. Cash basis bids for soyabeans in the Midwest were firm on Tuesday as dealers tried to generate farmer selling. Soyameal futures closed 50 cents to 80 cents per ton higher, with that market also boosted by a technical bounce.
Traders said funds bought 1,000 lots and Iowa Grain was a featured buyer of 800 might. The May contract was 80 cents per ton higher at $174.10 per ton. Soyameal traders continue to deal with the global spread of bird flu and its potential impact on soyameal demand.
But industry publication Oil World on Tuesday said global soyameal demand remains strong despite the spreading disease. Soyaoil futures were 0.07 to 0.14 cent per lb lower, with May down 0.08 at 22.83 cents per lb.
Traders said the large supply of vegetable oils continues to hang over the market and funds sold 1,500 lots. Malaysian palm oil futures closed weak overnight. Traders in Kuala Lumpur said palm was weak because of slack demand from key Asian importers and the strengthening ringgit.