December 25, 2008

 

CBOT soy review on Wednesday: Beans hit 5-week highs on fundamental strength

 

 

Chicago Board of Trade soy futures continued their recovery rally in an abbreviated trading session Wednesday(Dec 24), rising to five-week highs on the back of technical and fundamental strength.

 

CBOT markets closed at 1 p.m. EST.

 

CBOT January soy settled 14 3/4 cents higher at US$9.15 3/4, March soy finished 14 cents higher at US$9.19.

 

March soymeal settled US$6.50 higher at US$287.00 per short tonne. March soyoil finished 9 points higher at 31.61 cents per pound.

 

"The market is technically strong and when fundamental support from dryness concerns for South American crops and strong buying demand from China is added in, you have the recipe for upward movement," said Tim Hannagan, an analyst with Alaron in Chicago.

 

Export demand from China remains a driver of the market, and if South America would encounter continued weather issues, the trade is gearing up for China to potentially increase bookings of US supplies, Hannagan added.

 

Otherwise, a lot of the gains were attributed to technical buying, with bullish traders encouraged by the market's ability to hold above key moving average levels and the psychological US$9.00 level.

 

Nearby futures climbed to five-week highs, managing to ignore weakness in crude oil, with bearish signals from the US dollar index a supportive feature for US exports, Hannagan said.

 

The DTN Meteorlogix weather forecast said showers and cooler temperatures are in store for Brazil's Rio Grande do Sul Wednesday, followed by drier and cooler weather Thursday, and warmer conditions again Friday. This trend should help ease stress to crops. However, it won't end concerns as drier and hotter weather may return by the weekend.

 

Central Argentina crop areas will be dry or with only a few light showers during the next seven days. Temperatures will vary somewhat, with rainfall needed in some locations to help improve conditions for these crops. Long range charts suggest a chance for some important rain later in the 10-day period. However, this is a long-range outlook and subject to significant day-to-day changes, Meteorlogix added.

 

CBOT markets will be closed Thursday in observance of Christmas. The market will reopen for Friday's session and maintain a normal trading schedule.

 

On tap for Friday, the US Department of Agriculture will issue its weekly export-sales report at 8:30 a.m. EST. Soy sales are estimated at 500,000 to 750,000 tonnes. Soymeal sales are projected in a range of 50,000 to 100,000 tonnes, with soyoil sales expected in a zero-to-10,000-tonne range.

 

 

Soy Products

 

Soy product futures ended higher, climbing in unison with a bounce in soy. Soymeal extended its recovery from early December lows, propelling to eight-week highs on technical buying and adjustments in the meal/oil spread, analysts said. Soyoil futures ended higher, but maintained its sideways trend as spillover weakness from crude oil and a lack of fresh supportive news kept the trend of declining product share intact, analysts said.

 

March oil share ended at 35.54 percent and the March crush ended at 60 cents.