November 25, 2008
CBOT Soy Review on Monday: Climbs on equities, crude oil
Spillover support from rallies in the stock market and in crude oil pulled Chicago Board of Trade soybean futures sharply higher Monday.
January soybeans soared 44 cents to US$8.84 per bushel. January soymeal rose US$6.90 at US$257.40 per short tonne, and January soyoil jumped 205 points at 33.11 cents per pound. The soy complex took direction from the outside markets, which climbed after the federal government said it would bail out Citigroup Inc. (C). Crude oil is linked to soybeans because funds often trade in a basket of commodities and because soyoil is used to make biodiesel.
"Today really was about the Dow Jones [Industrial Average] taking off to the upside and pulling crude oil off its lows," said Tim Hannagan, analyst for Alaron.
Soybeans found additional strength from weakness in the U.S. dollar. A weaker dollar makes U.S. commodities more attractive for purchase by foreign countries.
Soybeans were technically oversold and due for a bounce after a sell-off last week, a CBOT floor trader said. Commodity funds bought an estimated 4,000 contracts.
January soybeans reached a session high of US$8.99 1/2 before paring gains. The session low was US$8.58.
Market participants had expected to see short-covering and position-squaring in soybeans this week ahead of the end of the month and the Thanksgiving holiday, Hannagan said. However, the federal government's bailout of Citigroup "really pushed forward the month-end position squaring," he said.
Soybeans could see some follow-through buying Tuesday, although a trader said the market could pull back a bit following Monday's strong rally. Soybeans will continue to watch outside markets, he said.
"I wouldn't be surprised if we settled back a little bit tomorrow and went flat Wednesday," the trader said.
The CBOT will be closed Thursday for Thanksgiving and have a shortened day session Friday.
Soy product futures finished solidly firmer with soybeans. They were lifted by rallies in the outside markets and in the neighboring pits on the CBOT floor, an analyst said.
Commodity funds bought an estimated 3,000 soyoil contracts and 2,000 soymeal contracts.
In other news, Brazilian farmers had planted 67% of the new 2008-09 soy crop by Nov. 21, Brazilian agribusiness consultancy Celeres said Monday. Celeres said that the new planting was up from 55% on Nov. 14 and compared with a five-year average of 69%.
Mato Grosso, Brazil's No. 1 soy-producing state, has planted 88% of its soy area, while Parana, the No. 2 producer, has planted 78%, according to Celeres. Brazil is the No. 2 soy producer behind the U.S.