December 30, 2008
CBOT Soy Review on Monday: Lower; stumbles on profit taking pressure
Soybean futures on the Chicago Board of Trade stumbled Monday, backpedaling from early gains on profit taking pressure.
CBOT March soybeans finished 11 cents lower at US$9.45 1/2.
March soy meal settled US$5.50 lower at US$291.50 per short tonne. March soyoil finished 59 points lower at 32.53 cents per pound.
After extending the market's recent recovery bounce from contract lows in opening trade, overbought conditions opened the door for traders to enjoy some end-of-the-year profit taking, said Dan Basse, president AgResource Company.
The exhaustion of buying at session highs coupled with a drop in cash basis levels amid a pick up in farmer sales aided the market's retreat in thin holiday trade, analysts said.
Dryness issues for South American crops, strong export demand from China, the supportive influence of crude oil price gains and weakness in the U.S. dollar provided strength to limit declines, traders said.
Nevertheless, futures struggled to maintain early price strength, as buyers ran for cover on signs of price weakness amid traders' unwillingness to take on risk heading into holiday.
Futures climbed near 3-month highs in early trade before selling pressure emerged.
Cropcast Weather Services said South American areas that have the most significant dryness include western Rio Grande do Sul, western Santa Catarina, northern and western Parana, southwestern Sao Paulo, and southern Mato Grosso do Sul in Brazil and much of Buenos Aires, La Pampa, Entre Rios, Santa Fe, and eastern Cordoba in Argentina.
Rains are expected to reach at least some of the dry spots in both regions this week, but the best chance for relief lies in central Brazil, Cropcast said. The expected rainfall of 1 inch or more will help to limit significant stress to the drier sections of Rio Grande do Sul and Santa Catarina as a result, while much of northeastern Cordoba, northern and eastern Santa Fe, Entre Rios, and eastern Buenos Aires are likely to remain a problem.
U.S. soybeans inspected for export in the week ended Dec. 25 totaled 30.593 million bushels. Analysts surveyed by Dow Jones Newswires anticipated inspections in a range of 25 million to 30 million bushels. The primary destination for the soybeans was China, which accounted for 16.741 million bushels.
In pit trades, speculative fund selling was estimated at 4,000 lots.
Soy product futures retreated in unison with soybeans, stumbling on profit taking and a decline in cash basis levels, analysts said. After rallies to multi-month highs, the markets were overdue for a setback heading into year-end, with traders booking some profits, analysts said.
March oil share ended at 35.88% and the March crush ended at 53 3/4 cents.
In pit trades, speculative fund selling was estimated at 2,000 lots in soyoil and 1,000 lots in soymeal.