December 18, 2008
CBOT Soy Review on Wednesday: Higher on short covering, spread unwind, dir
Soybean futures on the Chicago Board of Trade ended higher Wednesday, managing to push forward on spec short covering, weakness in the U.S. dollar and the unwinding of spreads.
CBOT January soybeans finished 5 1/2 cents higher at US$8.64.
January soymeal settled US$2.20 higher at US$263.20 per short tonne. January soyoil finished 35 points lower at 31.00 cents per pound. The absence of fresh directive news promoted a two-sided session. Futures struggled to find a clear path amid technical weakness and mixed signals from outside markets.
A weak U.S. dollar served as an underpinning force, but disappointment over a lack of a surprise from OPEC's oil-production cut and sliding equities applied pressure, analysts said.
South American weather issues were a supportive feature but not enough to float a strong rally in the face of economic uncertainties, said Chad Henderson, analyst with Prime Ag Consultants in Brookfield, Wisc.
The liquidation of some bear and corn/soybean spreads added to the session's theme, with the trade poised for a choppy ride into the end-of-the- year as traders remain risk averse in the current economic climate, Henderson added.
The DTN Meteorlogix weather forecast said Argentina's western and southern crop sectors will benefit from a few showers Wednesday and Thursday. Showers and cooler conditions may not reach major central corn- and soybean-growing areas until Sunday. Meanwhile, southern Brazil continues with mostly dry weather. Temperatures remain at or below normal, reducing stress to crops from the dryness.
The U.S. Department of Agriculture will issue its weekly export-sales report at 8:30 a.m. EST Thursday. Soybean sales are estimated at 575,000 to 750,000 tonnes. Soymeal sales are projected in a range of 50,000 to 100,000 metric tonnes, with soyoil sales expected in a zero-to-10,000-tonne range.
Soy-product futures ended mixed, with soymeal regaining product share versus soyoil. Soyoil futures stumbled in step with weakness in crude oil futures amid disappointment that OPEC didn't cut oil production by more than trade expectations, analysts said. OPEC announced Wednesday it will reduce oil production by 2.2 million barrels a day.
Soymeal benefitted from the drop in soyoil on spreads, garnering additional support from advances in soybeans.
January oil share ended at 37.06% and the January crush ended at 56 cents.