November 18, 2008

 

CBOT Soy Review on Monday: Bounce on technical buys and exhausted sales

 

 

Chicago Board of Trade soybean futures settled higher Monday, buoyed by technical buying, exhausted selling, and short covering in the absence of fresh news.

 

CBOT January soybeans finished 10 1/2 cents higher at US$9.06 1/2.

 

January soymeal settled US$5.80 higher at US$271.30 per short tonne. January soyoil finished 28 points lower at 32.32 cents per pound.

 

Futures ran out of sellers, with ideas recent sideways price action was pointing to a near-term bottom in the market attracting short covering on breaks, said Tim Hannagan, analyst with Alaron Trading in Chicago.

 

The market initially stumbled in step with outside crude oil and equity markets, but quickly bounced as those markets reversed course. Price strength carried on despite up-and- down price action in other markets, with traders viewing that as a sign that futures are trying to divorce themselves from outside markets.

 

However, traders remain leery of pushing prices in the face of a bearish economic situation, fearful of the next shoe to drop, as in the form of recent news regarding the health of General Motors and Citigroup, said a CBOT floor analyst.

 

Nevertheless, the market looks like it's getting some legs beneath it, Hannagan said. There has been no follow- through selling on breaks, there is short covering ahead of next week's holiday, and tight farmer holding of supplies opens the door for buyers to begin to regain confidence looking forward, he added.

 

Dryness concerns in Argentina provided mild support to aid price strength as well.

 

The DTN Meteorlogix weather forecast said the central Argentina crop belt continues to be very dry. Severe to extreme dryness covers most of the region except for western Buenos Aires province. This week's outlook has no significant improvement in this dry weather pattern.

 

In pit trades, speculative fund buying was estimated at 2,000 lots.

 

 

SOY PRODUCTS

 

Soy product futures ended mixed, with soymeal rising in step with soybeans. Technical buying and underlying demand helped propel soymeal.

 

Soyoil futures experienced two-sided action, following the lead of crude oil futures. Meal/oil spreading and the impact of crude oil pinned soyoil in negative territory down the stretch.

 

January oil share ended at 37.59% and the January crush ended at 53 1/4 cents.

 

Speculative fund buying was estimated at 1,000 lots in soymeal while fund selling was estimated at 1,000 lots in soyoil.