January 15, 2009

 

CBOT Soy Outlook on Thursday: Firm open on Argentine weather; exports up

 

 

Chicago Board of Trade soybean futures are expected to open modestly higher Thursday, as concerns over hot, mostly dry weather in Argentina and strong export sales provide early support.

 

CBOT soybean futures are called to open 4-6 cents a bushel higher, with expected slight losses in corn and wheat also a mildly bearish influence on the market, traders said. Traders will also keep their eyes on the U.S. dollar, which is steady to firm in early dealings.

 

On Wednesday, March soybeans settled unchanged at US$9.71 1/2 a bushel, as profit-taking pressured prices after a higher open. May beans slipped 1/2 cent to end at US$9.80 1/4.

 

Mostly dry conditions and episodes of above-normal temperatures continue to stress developing soybeans in Argentina. While scattered showers and thunderstorms are expected to develop over the weekend, producing 0.25-0.75 inch of rain, it will not be enough to provide significant relief," private forecaster DTN Meteorlogix said.

 

Temperatures are expected to run near to above normal on Monday and to above-normal by Tuesday and Wednesday.

 

Weekly U.S. export sales for soybeans increased significantly from last week, reflecting improved demand. Net 2008-09 sales for the week to Jan. 8 totaled 1.362 million metric tonnes, up 2 3/5 from the previous week, the U.S. Agriculture Department reported. Sales of 2,700 tonnes were also reported for the 2009-10 marketing year.

 

Sales increases came from China at 861,800 tonnes, which included 55,000 switched from unknown destinations, while Egypt bought 156,000 tonnes and Indonesia purchased 105,500.

 

Soybean shipments totaled 727,100 tonnes, down 10% from last week and 24% below the previous four-week average, the USDA said. China was the primary destination at 395,700, with Mexico second at 155,400 tonnes.

 

The sales data may provide early support to the market, though the fact crude oil is down and the dollar slightly firmer could turn the session into a two-sided affair.

 

"This was a big (export) figure again - it's basically double the high estimates of the range," said Don Roose, analyst and president of U.S. Commodities.

 

But, he explained, lower crude oil futures and losses on Wall Street amid economic gloom will likely cast a pall over the futures markets and could force the grains complex into a two-sided trade.

 

China's soybean futures fell Thursday, as prices consolidated amid thin trading volumes, analysts said. The market has mostly factored in bullish news, and traders expect upward momentum to wither for the near term.

 

The benchmark September 2009 soybean contract on the Dalian Commodity Exchange rose RMB39 to RMB3,395/tonne, down 1.1%.

 

Soy products are expected to open mostly higher, following the lead of soybeans, traders said.

 

Export sales for soymeal totaled 74,400 tonnes, up 3 4/5 from the previous week, the USDA said. Shipments were reported at 210,900 tonnes, a 100% increase from the previous week.

 

On soyoil, net sales were 17,000 tonnes. Shipments totaled 4,500 tonnes, down 47% from the week prior.