December 3, 2008
CBOT Soy Review on Tuesday: New range lows on technical, outside pressure
Chicago Board of Trade soybean futures ended lower Tuesday, setting a new swing low for the current move on technical weakness, outside pressure and demand concerns.
CBOT January soybeans finished 19 cents lower at US$8.27.
January soymeal settled US$5.20 lower at US$245.30 per short tonne. January soyoil finished 63 points lower at 30.77 cents per pound.
Carryover technical selling from Monday's sharp declines, weakness in crude oil, improved South American crop conditions and concerns about the future of China's buying needs attracted sellers to drop prices to new range lows, said John Kleist, broker/analyst with Allendale Inc.
The absence of fresh directive news and a lack of conviction in outside market moves promoted cautious activity, with declines accelerating once active contracts penetrated near-term lows, Kleist added.
A drop in crude oil prices and improvements in Argentine crop conditions provided pressure to offset an early recovery bounce in prices. Worries that China's buying interest could wane amid global economic woes and fail to prop up U.S. prices attracted selling as well, traders said.
Looking ahead traders anticipate a continued grinding of prices until a low is established with the influence of outside markets and demand the key driver of prices in the near term.
The DTN Meteorlogix weather forecast said dry crop areas of southern Brazil have a chance for light rainfall in the next two days. Rio Grande do Sul and Parana have up to three-quarters of an inch rainfall in store Tuesday. However, more rain will be needed, especially in Rio Grande do Sul, where conditions have been drier than normal since early November.
In pit trades, speculative fund selling was estimated at 2,000 lots.
Soy product futures dropped in unison with soybeans Tuesday. Soyoil futures were influenced by technical selling and borrowed weakness from crude oil. Soymeal futures stumbled on spillover from soybeans and lagging domestic demand, analysts say.
January oil share ended at 38.78% and the January crush ended at 51 1/4 cents.