December 12, 2008
CBOT Soy Review on Thursday: Soybeans rise, extend recovery on technical buying
Soybean futures on the Chicago Board of Trade rose Thursday, continuing its recovery from prior lows on technical buying and outside support from a weaker U.S. dollar.
CBOT January soybeans finished 27 cents higher at US$8.56 1/2.
January soy meal settled US$8.30 higher at US$256.30 per short tonne. January soyoil finished 87 points higher at 31.72 cents per pound.
The lower U.S. dollar served as the catalyst for commodity price strength, with supportive weekly export sales and a continuation of the market's technical bounce aiding the price gains, said Joe Victor, analyst with Allendale Inc.
The dollar opened the door for the advances as it paves the way for continued export demand, Victor added. A weaker U.S. dollar makes dollar denominated U.S. exports like soybeans more competitive in world markets.
A surge in crude oil futures helped extend the bounce as well because the market lacked any fundamental surprises in the U.S. Department of Agriculture supply and demand report.
A technical analyst said the market has experienced a short-covering bounce from Friday's contract low of US$7.76 1/4 a bushel. Prices, however, remain trapped below a five-month-old downtrend on the daily bar chart, from the early July contract high of US$16.48 a bushel.
For soybean bulls to get some significant upside near-term technical momentum uncorked, they would have to produce a close above solid technical and psychological resistance at US$9.00 a bushel, basis January futures, he added.
Otherwise, traders anticipate futures will continue to be influenced by outside markets unless a South American weather event emerges or a battle for acres surfaces to break prices away from crude oil and U.S. dollar movements, Victor said.
U.S. soybean ending stocks were pegged at 205 million bushels, unchanged from the USDA's estimate in November, but above the average analyst estimate of 200 million bushels. The government raised its export estimate by 30 million bushels to 1.050 billion bushels while decreasing the amount of soybeans it expects to be crushed by 30 million bushels to 1.715 billion bushels.
USDA reported total weekly soybean export sales were a net 811,800 metric tonnes for the week ended Dec. 4. Sales for 2008/09 were a net 809,800 metric tonnes. Analysts had forecast sales between 500,000 and 800,000 metric tonnes. USDA also announced Thursday private export sales of 120,000 metric tonnes of U.S. soybeans for delivery to China in the 2008-09 marketing year.
In pit trades, speculative fund buying was estimated at 4,000 lots.
Soy product futures climbed in unison with soybeans, benefitting from a slide in the U.S. dollar, rallying crude oil futures and technical buying. The support from outside influences and lower crush overshadowed lower than expected weekly export sales, analysts said. Commercial buying was seen aiding soyoil's rise as well.
USDA said soymeal sales were a net 18,600 tonnes, below trade estimates ranging from 70,000 to 125,000 tonnes. Soyoil commitments were a net 400 metric tonnes. Analysts had forecast sales between zero and 10,000 tonnes.
In pit trades, speculative fund and commercial buying was estimated at 1,000 lots each in soyoil.
January oil share ended at 37.62% and the January crush ended at 56 1/4 cents.