November 5, 2008
CBOT Soy Review on Tuesday: Soy rallies into election on dollar weakness
Chicago Board of Trade soybean futures slipped from Tuesday's highs but found support in the finality of Election Day and the commodities rally generated by marked U.S. dollar weakness.
November soybean contracts gained 21 1/4 cents a bushel to close at US$9.49 1/2, just off the day's US$9.49 low. The contract traded a 21-cent range. January soybeans added 21 1/2 cents to US$9.59. It spread a 24-cent range, bottoming at US$9.57.
Midday estimates pegged speculative fund buying at 3,000 soybean contracts.
Soybeans saw "a relief rally" as the presidential election neared a close, said Anne Frick, an analyst with Prudential Bache.
Traders felt the end of the election would help eliminate uncertainty from the economy and the markets, she said.
Once a winner is declared, traders expect the winner "can start to work on the transition and get back to business and looking at the economy," she said.
Weakness in the U.S. dollar added support to commodities, she said.
Traders also pointed to the dollar's weakness as the primary factor in Tuesday's rally; but crude oil also received support from production cuts. The Organization of Petroleum Exporting Countries had planned to add to recent cutbacks by reducing output an additional 1.5 million barrels a day beginning Nov. 1.
Soybeans slipped briefly after private research firm Informa Tuesday morning released new soybean crop estimates one trader termed as "bearish," but soon returned to the day's highs before the pre-close sell-off.
Informa's total estimated soybean production number of 2.987 billion bushels is about 1.7% higher than the USDA's current forecast. Informa's yield estimate of 40.2 bushels per acre also tops the USDA's 39.5 bushels-per-acre figure.
The USDA is scheduled to release updated estimates Nov. 10 at 8:30 a.m. EST.
The CBOT soy complex posted gains Tuesday, following a commodities rally inspired by a materially weaker U.S. dollar. The finality of Election Day also offered support to commodities and equities, traders and analysts say.
December soymeal settled US$2.60 higher at US$277.80 per short tonne. January soymeal moved up US$2.50 to US$279.70. December soyoil finished 123 points higher to 35.97 cents per pound.
Funds bought an estimated 1,000 soymeal lots and 2,000 soyoil lots, according to midday estimates.
December oil share ended at 39.3% and the November/December crush ended at 57 1/4 cents.