January 2, 2009

 

CBOT Soy Outlook on Friday: Down on outsides, fundamentals to underpin

 

 

Chicago Board of Trade soybean futures are seen opening Friday's session on the defensive, taking their cue from weak outside market influences in the absence overnight directives.

 

CBOT grain and oilseed overnight electronic trading was closed due to the New Year's day holiday.

 

CBOT soybean futures are called 5 cents to 10 cents lower.

 

Lower crude oil futures and strength in the U.S. dollar are lending pressure to the market, but South American weather concerns and solid export demand from China will continue to underpin prices, said Vic Lespinasse, an analyst with Grainanalyst.com.

 

Technical strength attributed to the market's two-month uptrend is expected to attract buying on breaks as well, while traders remain cautious in thin holiday trading, analysts added.

 

A technical analyst said stochastics and the relative strength index are overbought and are turning bearish, hinting that a short-term top might be in or is near. Closes below the 20-day moving average basis the March soybean future crossing at US$8.75 1/2 would temper the near-term friendly outlook.

 

If March extends this month's rally, November's high crossing at US$9.89, then the 25% retracement level of the July-December decline crossing at US$9.97 3/4 are the next upside targets, he added.

 

The DTN Meteorlogix weather forecast said rainfall during the past few days have likely improved conditions for Argentine crops in the Cordoba province. Otherwise only a few light showers were reported. Drier weather is forecast for the next five to seven days, but longer range charts show some chance for showers.

 

In Brazil, rain and thunderstorms that began Thursday and continue Friday will favor developing soybeans and corn in most, if not all, growing areas, Meteorlogix reports.

 

U.S. Department of Agriculture reported total weekly soybean export sales were a net 512,000 metric tonnes for the week ended Dec. 25. Sales for 2008-09 were a net 510,600 metric tonnes. Analysts had forecast sales between 250,000 and 450,000 metric tonnes. The primary buyer was China with 356,500 metric tonnes. Soymeal sales were a net 43,300 tonnes, above trade estimates ranging from 45,000 to 85,000 tonnes. Soyoil commitments were a net sales reduction of 6,700 metric tonnes. Analysts had forecast sales between zero and 5,000 tonnes.

 

USDA also announced Friday private export sales of 115,000 metric tonnes of U.S. soybeans for delivery to China in the 2008-09 marketing year.

 

In deliveries, January soybean deliveries totaled 415 lots. A customer account at MF Global issued 228 lots, while the house account at Tenco Inc. was the primary stopper of 242 lots. The last trade date assigned was Dec. 12.

 

January soyoil deliveries totaled 1,906 lots. The house account at Term Commodities issued of 428 lots, while customer accounts at Man Professional Clearing issued 715 lots. A customer account at Man Professional Clearing was the primary stopper of 794 lots. The last trade date assigned was Dec. 30.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange hit an 11-week high and rose for the fifth successive trading day Friday, building on gains made earlier this week. The benchmark March contract on Bursa Malaysia Derivatives ended MYR45 higher at MYR1,740 a metric tonne.