January 14, 2009

 

CBOT Soy Review on Tuesday: Rises, finds stability on fundamentals

 

 

Soybean futures on the Chicago Board of Trade ended higher Tuesday, finding stability after Monday's sharp declines as bullish fundamentals underpinned prices.

 

CBOT March soybeans finished 5 1/2 cents higher at US$9.71 1/2. March soy meal settled US$0.50 higher at US$295.00 per short tonne. March soyoil finished 42 points higher at 34.83 cents per pound.

 

The session's gains were reflective of the market's fundamental makeup, with lingering dryness issues for Argentine crops and strong Chinese demand serving as the catalysts, said Greg Wagner, analyst with AgResource Company in Chicago.

 

There are near-term question marks for Argentina crops amid the hot/dry characteristics of the Argentine growing season, Wagner said. A good portion of the crop remains at risk of losses amid a rapidly developing La Nina weather pattern, he added.

 

Meanwhile, China's demand for U.S. soybeans has not shown any sign of abating, and Monday's limit down drop in price makes U.S. soybeans more attractive, analysts said.

 

However, futures ended well off session highs, with futures trimming early gains on strength in the U.S. dollar, spillover weakness from corn futures and talk of speculative profit taking.

 

Traders were cautious of holding added length following Monday's setback, with overbought conditions following a nearly US$2.50 rally since Dec. 5 opened the door for position evening, analysts added.

 

The DTN Meteorlogix weather forecast for central Argentina continued to feature dry conditions during the majority of the next seven days. Besides the dry weather, episodes of hot temperatures will increase stress on pollinating corn and developing soybeans and sunflowers. Some showers and thunderstorms are expected over the weekend. However, precipitation will be light and not enough to provide significant relief to crops.

 

On tap for Wednesday, the National Oilseed Processors Association's monthly soybean crush report for December is scheduled to be released at 8:30 a.m. EST (1330 GMT).

 

The monthly soybean crush report is expected to edge higher from the previous month to 140.9 million bushels, according to a survey of industry analysts.

 

 

SOY PRODUCTS

 

Soy product futures settled higher Tuesday, consolidating after Monday's heavy losses. The markets recovered in unison with soybeans amid underlying concerns for South American crops, analysts said. However, futures pulled well off early advance as did soybeans, pressured by end-of-the-day position evening, spillover weakness from corn and strength in the U.S. dollar, traders said.

 

March oil share ended at 37.26% and the March crush ended at 58 cents.