December 24, 2008

 

CBOT Soy Review on Tuesday: Rally to 3-week high on fundamental support

 

 

Soybean futures at the Chicago Board of Trade continued their recovery bounce from contract lows Tuesday, rallying to 3-week highs on fundamental and technical support.

 

CBOT January soybeans settled 14 1/2 cents higher atUS$9.01, March soybeans finished 14 1/2 cents higher at US$9.05.

 

March soy meal settled US$5.60 higher at US$280.50 per short tonne. March soyoil finished 27 points higher at 31.52 cents per pound.

 

The market managed to disengage from the outside influences of energies and the U.S. dollar, said Greg Wagner, analyst with AgResouce Company in Chicago.

 

The gains were a reflection of concerns surrounding dryness for South American crops coupled with robust export demand and firm cash basis levels, Wagner said. The U.S. is the world's reserve for soybean supplies until South American production comes online in the spring, Wagner added.

 

Adding to the bullish mix was technically inspired buying, with advances accelerating once nearby contracts eclipsed psychological resistance at the US$9 per bushel level. Traders said nearby futures were gravitating toward the US$9 strike levels, as options on January options expired at the close of Tuesday's session.

 

Otherwise, volume was light, but traders were encouraged by the markets ability to bounce on fundamental concerns despite weakness from outside markets and bearish crush data showing lagging domestic demand, analysts added.

 

The DTN Meteorlogix weather forecast said Argentina's central crop areas will be dry or with only a few light showers during the next seven days. Temperatures will vary somewhat, cool at times and hotter at times.

 

In northern Brazil crop areas, weather conditions are favorable for developing soybeans. Mato Grosso continues to have mild temperatures and periodic showers.

 

U.S. soybean crushings totaled 144.6 million bushels in November, according to data released by the U.S. Census Bureau Tuesday. On average, analysts anticipated a 146.4-million-bushel crush, according to a Dow Jones Newswires survey. Crushings were down from 150.1 million bushels a month earlier.

 

 

SOY PRODUCTS

 

Soy product futures ended higher, breaking out of an early choppy two-sided theme in unison with soybeans. Spillover from soybeans and technical buying served as the catalyst for the bounce, analyst said. The support allowing both markets to escape the bearish clutches of weak crude oil prices and much larger than expected November stocks in the census crush report, analysts added.

 

Census soymeal stocks for November totaled 599,326 short tonnes, compared to the average estimate of 343,000. Soyoil stocks totaled 2.562 billion pounds. Analysts, on average, expected 2.465 billion pounds.

 

March oil share ended at 35.99% and the March crush ended at 58 3/4 cents.