December 27, 2008
CBOT Soy Review on Friday: Rally; extends uptrend, at 7-week highs
Soybean futures on the Chicago Board of Trade ended sharply higher Friday, climbing to seven-week highs as the market continued its uptrend from prior lows.
CBOT January soybeans settled 36 cents higher at US$9.51 3/4, March soybeans finished 37 1/2 cents higher at US$9.56 1/2.
March soy meal settled US$10.00 higher at US$297.00 per short tonne. March soyoil finished 151 points higher at 33.12 cents per pound.
The combination of technical strength, South American weather concerns and a strong underlying demand base from China served as catalysts to keep upside movement the path of least resistance, analysts said.
The market has been on an upswing since setting contract lows Dec. 5, with advances accelerating amid nearby contract's ability to rally above key resistance levels during this period. The latest technical boost came from nearby contract's ability to push above the psychological US$9.50 level, analysts added.
Traders said the advances were a bit exaggerated by a lack of sellers in a thin post holiday market.
Nevertheless, fundamentals have regained prominence after futures followed outside markets for the past three months. Moisture issues for Argentina and southern Brazil are raising doubts about potential South American production, and with China staying in an aggressive buying mood, traders are taking a bullish stance in the market, a CBOT floor analyst said.
The DTN Meteorlogix weather forecast said temperatures in Argentina continue to climb into the 90s Fahrenheit. Rain is sparse, with only an occasional shower falling. Those conditions are stressful for soybeans in the area. The next few days, into Wednesday will bring only brief rains Tuesday with temperatures generally staying above normal.
Most of Brazil has moderate conditions and some light rainfall, but the southern areas of Rio Grande do Sul and Parana are dry and hot, similar to conditions in adjoining Argentina. Like Argentina, southern Brazil is not likely to see much relief through early next week, Meteorlogix said in the forecast. In pit trades, speculative fund buying was estimated at 3,000 lots.
Soy product futures soared Friday, with buyers energized by bullish technical chart signals. Soymeal futures rallied to 12-week highs, with buying accelerating as the market eclipsed resistance at major moving averages. Higher-than-expected weekly export sales provided a fundamental boost for soymeal as well. Soyoil broke out of its sideways trend, setting four-week highs on technical strength and spillover from advances in crude oil futures, analysts said.
March oil share ended at 35.83% and the March crush ended at 61 1/4 cents.
In pit trades, speculative fund buying was estimated at 2,000 lots in soyoil and 1,000 lots in soymeal.
U.S. Department of Agriculture reported total weekly soymeal export sales were a net 145,700 tonnes, above trade estimates ranging from 50,000 to 100,000 tonnes. Soyoil commitments were a net 5,400 metric tonnes. Analysts had forecast sales between zero and 10,000 tonnes.