December 17, 2008
CBOT Soy Review on Tuesday: Futures climb on lack of outside pressure
Soybean futures on the Chicago Board of Trade ended higher Tuesday, sustaining price strength because of the absence of outside pressure and light short-covering interest.
CBOT January soybeans finished 12 1/2 cents higher at US$8.58 1/2.
January soy meal settled US$4.20 higher at US$261.20 per short tonne. January soyoil finished 80 points higher at 31.35 cents per pound. A lack of fresh fundamental news promoted cautious trade, with mixed signals from outside markets failing to generate strong momentum, analysts said.
However, weakness in the U.S. dollar and strength in equities provided enough support to limit selling and encourage some pre-holiday short covering. Lingering worries about dryness issues in South America and solid underlying demand served as fundamental forces to lift prices as well, traders added.
Spillover support from rallying corn prices provided a late boost, as soybeans need to sustain a price relationship with corn to not loose a new crop acreage battle, a CBOT floor analyst said.
Nevertheless, activity was subdued, with many participants taking a cautious approach. Traders were unwilling to take on added risk ahead of the U.S. Federal Reserve's decision on interest rates that will affect the U.S. dollar and Wednesday's OPEC decision on oil production that will impact crude oil futures, a CBOT floor analyst said.
Crude oil and the dollar have been key outside influences on soybean price direction in recent months.
After the close, the Federal Reserve lowered the discount rate 75 basis points to a range of zero to 0.25%. Traders anticipate choppy activity to remain a feature as thinning volume ahead of the holidays limits the market's decisiveness, analysts said.
The DTN Meteorlogix weather forecast said Argentina's corn and soybean areas continue to have temperatures well-above normal in the 90-degree range Fahrenheit. Conditions will remain generally dry with only scattered showers, not as frequent as needed. Temperatures are expected to remain above normal, although a bit cooler.
In pit trades, speculative fund buying was estimated at 3,000 lots.
Soy product futures rallied in unison with soybeans, energized by short covering and underlying end-user buying. Weakness in the U.S. dollar served as a catalyst to attract buyers, with spillover from soybeans a stabilizing force, analysts said.
In pit trades, speculative fund buying was estimated at 1,000 lots in soyoil.
January oil share ended at 37.52% and the January crush ended at 60 1/2 cents.