January 1, 2009

 

CBOT Soy Review on Wednesady: Rally, year end spec buys, argentine weather

 

 

Chicago Board of Trade soybean futures ended higher Wednesday, spiking down the stretch on broad-based speculative and technical buying, and underlying weather concerns for South American crops.

 

CBOT March soybeans finished 27 cents higher at US$9.80.

 

March soy meal settled US$2.50 higher at US$299.80 per short tonne. March soyoil finished 118 points higher at 33.60 cents per pound.

 

The market is still centered on technicals, and the recent uptrend is still in place, said John Kleist, broker/analyst with Allendale Inc. in McHenry, Ill.

 

The market bounced to a new eight week high, with advances accelerating on end-of-the year technical momentum, lingering worries about heat/dryness stress for Argentina crops and strong Chinese demand.

 

The absence of aggressive sellers in thin holiday trade aided the market's gains, with a surge across the commodity sector, particularly crude oil, attracting a late wave of speculative buying, traders said.

 

End-of-the-year speculative position evening was featured, as participants continued the trend of short-covering that has been evident in the market's recent uptrend from contract lows, Kleist said.

 

Otherwise, the market lacked fresh inputs, opening the door for technical buying to surface again. Traders also pointed to historical tendencies, where soybeans had ended higher on the last trading day of the year five out of the last six years, a CBOT floor broker said.

 

Looking ahead, the market is poised for some "toppy, consolidation action" unless crop conditions deteriorate further in South America, said Kleist.

 

In pit trades, speculative fund buying was estimated at 3,000 lots.

 

On tap for Friday, the U.S. Department of Agriculture will issue its weekly export-sales report at 8:30 a.m. EST. Soybean sales are estimated at 250,000 to 450,000 tonnes. Soymeal sales are projected in a range of 45,000 to 85,000 metric tonnes, with soyoil sales expected in a zero-to 5,000-tonne range.

 

SOY PRODUCTS

 

Soy product futures rallied in step with soybeans Wednesday. Soyoil futures led the upside push, regaining product share on spreads. Soyoil garnered support from a surge in crude oil, technical buying and broad based commodity buying.

 

Spillover support from soybeans carried meal higher, but end of the year oil/meal spread realigning applied pressure to limit advances, traders said.

 

March oil share ended at 36.02% and the March crush ended at 49 1/4 cents.

 

In pit trades, speculative fund buying was estimated at 2,000 lots in soyoil and 1,000 lots in soymeal.