December 20, 2008
CBOT Soy Review on Friday: Slips on profit-taking, dollar pressure
Profit-taking and pressure from the firm U.S. dollar drove Chicago Board of Trade soybean futures lower Friday.
January soybeans closed down 1 1/4 cents at US$8.68 1/4 per bushel, up 14 1/4 cents on the week. March soybeans fell 2 cents to US$8.72 1/2, up 16 1/4 cents on the week. January soymeal jumped US$1.20 to US$267.50 per short tonne, while January soyoil slipped 10 points to 30.60 cents per pound.
Traders booked profits in soybeans ahead of the weekend and the holidays, said Tim Hannagan, analyst for Alaron. The CBOT will close early Wednesday in observance of Christmas Eve and remain closed Thursday for Christmas.
"Everybody goes to the bank on Friday," Hannagan said. "The general action was motivated by profit-taking, balancing books ahead of the weekend. A lot of people are balancing out for the holiday as well."
Strength in the dollar was bearish for grains and soybeans because it gives foreign countries less buying power to import U.S. commodities, analysts said. The soybean market was underpinned by strong demand, they said.
The U.S. Department of Agriculture on Thursday reported total weekly soybean export sales were 900,300 metric tonnes for the week ended Dec. 11. Analysts had expected sales of between 575,000 and 750,000 metric tonnes.
Production problems due to dryness in Brazil could shift some demand to the U.S., prompting market participants to buy breaks, Hannagan said. Argentina and Brazil are due to receive some moisture in the near term, but there are worries about a possible return of hot, dry weather, Hannagan said.
Thunderstorms "remain probable to affect Argentina this weekend, beyond helpful" overnight rain that brought 0.5 inch to 1.5 inches across La Pampa and southwestern Buenos Aires overnight, T-Storm Weather said in a forecast. However, heat should return to Argentina by next weekend or shortly thereafter, according to the private weather firm.
January soybeans closed above technical support at US$8.60 and held above that level in open outcry trading, hitting a session low of US$8.61 1/2. Technicians may see that as supportive and come in buying Sunday night and Monday, Hannagan said.
Soy product futures closed mixed. Soymeal shook off early weakness to advance late in the session.
Soyoil closed lower with soybeans. The complex felt pressure from weak outside markets, a floor trader said.
January soymeal closed up US$9.80 on the week. January soyoil ended down 32 points on the week.