November 11, 2008
CBOT Soy Review on Monday: Climbs on outsides, fundamentals
The combination of bullish outside market influences and supportive underlying fundamentals served as the catalyst to propel Chicago Board of Trade soybean futures to strong gains Monday.
CBOT November soybeans ended 28 1/4 cents higher at US$9.40 a bushel, January soybeans finished 27 cents higher at US$9.48.
December soymeal settled US$3.60 higher at US$275.30 per short tonne. December soyoil finished 148 points higher at 35.38 cents per pound.
Bullish underlying fundamentals with solid export demand and tight farmer holding are buoying prices. Strong sentiment that grain futures are starting to build a base as outside markets stabilize helped lift prices, said Tim Hannagan, analyst with Alaron Trading.
A late upside push in crude oil futures helped soybeans bounce down the stretch, with the inability of futures to press lower and a lack of directives from U.S. Department of Agriculture's crop report kept futures following outside markets.
The absence of index fund selling and the inability of futures to set a new low recently, or challenge their October lows is providing technical clues that a near term low is in place, said Hannagan.
The market remains under the big shadows of outside markets, but with a solid fundamental foundation and a lack of price satisfaction to attract farmer selling is providing a base to keep a floor under prices and limit downside risks, said Jack Scoville, analyst with Price Futures Group.
Futures failed to break out of their recent sideways trading range, as the USDA crop report failed to produce any surprises.
U.S. Department of Agriculture will release its weekly crop progress report at 4 p.m. EST, with analysts anticipating the soybean harvest progress in a range of 93% to 95%.
USDA reported 2008-09 soybean production at 2.921 billion bushels, down 17 million from the October estimate of 2.938 billion based on a lower yield estimate, but above the average of analysts' estimates for a crop size of 2.916 billion bushels. The 2008-09 U.S. soybean yield was estimated at 39.3 bushels per acre, down from the October estimate of 39.5.
The USDA forecast 2008-09 U.S. soybean ending stocks at 205 million bushels, unchanged from last month, and above the average analyst estimate of 189 million.
In pit trades, speculative fund buying was estimated at 1,000 lots.
Soy product futures climbed in unison with soybeans, with soyoil receiving an added boost from a late bounce in crude oil futures and a tighter ending supply forecast from USDA.
USDA lowered its estimate for 2008-09 soyoil ending stocks to 2.016 billion pounds from 2.040 billion in October.
December oil share ended at 39.16% and the November/December crush ended at 54 3/4 cents.
Speculative fund buying was estimated at 1,000 lots in soyoil.