US soybean futures rose to a five-week high on Wednesday as firm domestic cash markets lent support along with concerns about dryness in South America as January, a key crop development period, approaches. But volume was thin before the Christmas holiday, making prices vulnerable to exaggerated moves, traders said.
"Underlying everything is the farmer is not selling beans, it's slowed the crush down enough to be supportive," said Dan Cekander, analyst with Newedge USA Inc. Both domestic processors and exporters are trying to source soybeans, which has firm US cash basis markets.
That has been the theme for weeks, thus pushing Chicago Board of Trade soybeans to rise about $9 a bushel two days in a row the highest closes since mid-November. "The meal chart has been straight up for two weeks" as processors cut back on the amount of soybeans they crush into soymeal and oil, Cekander said.
Then there is the scare about potential damage to the South American soy crop as December has been dry. Of most concern is Argentina, the world's third largest soy exporter and top supplier of meal and oil, which is expected to be dry for the next seven days.
"It was an impressive close the charts look technically strong for soybeans, meal and wheat," said Vic Lespinasse, analyst with GrainAnalyst.com in Chicago. The strength in soybeans and soymeal led to spillover buying in corn and wheat, with traders covering short positions before the end of the year.
CBOT January soybeans ended 14-3-4 cents higher at $9.15-3/4 a bushel. January soymeal closed $6.50 per ton higher at $287.90 per ton. The Chicago wheat market hit a seven-week top, with the March contract ending 7 cents up at $5.82-1-4 a bushel.
March corn closed 3-1-4 cents higher at $3.98. The rise in wheat prices came despite prospects for lackluster export demand. Reminders of that came this week as Egypt and Pakistan snubbed pricey US wheat and bought cheaper Russian and Black Sea wheat.
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