January 8, 2009

 

CBOT Soy Outlook on Thursday: Down 7-9 cents; follow-through technical sales

 

 

Chicago Board of Trade soybean futures are poised for a lower start to Thursday's day session, pressured by follow-through technical selling and trade positioning ahead of index-fund rebalancing.

 

CBOT soybean futures are called 7 cents to 9 cents lower.

 

In overnight electronic trading, March soybeans finished 6 1/4 cents lower at US$9.83 3/4. March soymeal was US$0.60 lower at US$294.90 per short tonne, while March soyoil ended 55 points lower at 35.63 cents per pound.

 

The market is technically overbought and with estimates that index funds need to sell in the area of 4,500 soybean contracts to rebalance their portfolios, buyers are seen taking a breather, a CBOT floor analyst said. A deepening U.S. recession is seen adding some macroeconomic pressure on prices as well, he added.

 

However, supportive underlying fundamentals, with falling South American crop forecasts, slightly drier weather outlooks for Argentina and solid underlying export demand, are underpinning features, analysts said.

 

A market technician said the next upside price objective for March soybeans is to push and close prices above solid technical resistance at US$10.50 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$9.36 a bushel.

 

First resistance for March soybeans is seen at US$10 and then at Wednesday's high of US$10.23. First support is seen at Wednesday's low of US$9.88 1/2 and then at US$9.76 3/4.

 

The DTN Meteorlogix weather forecast said a chance for better shower activity in Argentina appears to be confined to a 36- to 48-hour period centered on next Monday. This is less than indicated on yesterday's maps and means the prospects for better rainfall are more uncertain today.

 

The National Commodities Supply Corp, or Conab, said Brazil should harvest 57.7 million metric tonnes of soybeans in the 2008-09 crop year. The number is 3.8% below the 60 million tonnes from the 2007-08 soy crop, as well as below Conab's previous estimate on Dec. 8 that put the soy crop at 58.8 million tonnes for 2008-09.

 

U.S. Department of Agriculture reported total weekly soybean-export sales were a net 551,100 metric tonnes for the week ended Jan. 1. Sales for 2008-09 were a net 529,700 metric tonnes. Analysts had forecast sales between 375,000 and 500,000 metric tonnes. The primary buyer was China with 444,500 metric tonnes. Soymeal sales were a net 19,700 tonnes, below trade estimates ranging from 30,000 to 100,000 tonnes. Soyoil commitments were 3,500 metric tonnes. Analysts had forecast sales between zero and 10,000 tonnes.

 

USDA also announced private exporters reported export sales of 120,000 metric tonnes of soybeans for delivery to China during the 2008/2009 marketing year, the USDA said Thursday.

 

U.S. Census Bureau Thursday downwardly revised its November soyoil stocks estimate to 2.542 billion pounds from its preliminary estimate of 2.562 billion pounds, according to the Census Bureau's Fats and Oils stocks report.

 

In deliveries, January soybean deliveries totaled 77 lots. The house account at ADM Investor Services stopped 76 lots. The last trade date assigned was Jan. 5.

 

January soyoil deliveries totaled 811 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was Jan. 7.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Thursday, pressured by the fall in CBOT and crude-oil prices overnight. The new benchmark September 2009 soybean contract settled RMB61 lower at RMB3,286 a metric tonne, or down 1.8%.

 

Crude palm oil futures on Malaysia's derivatives exchange fell as much as 6.1% Thursday on technical selling and profit-taking, said trade participants. The benchmark March contract on Bursa Malaysia Derivatives ended MYR120 lower at MYR1,865 a metric tonne.