January 21, 2010

 

CBOT Soy Outlook on Thursday: Up 2-4 cents; bounce on oversold conditions

 

 

Traders anticipate a higher start for Chicago Board of Trade soybean futures Thursday, as the market stages a modest short-covering bounce after prices slid in 9 out of the last 10 trading days.

 

In overnight trade, March soybeans were 4 cents or 0.42% higher at US$9.54, and May soybeans were 3 1/4 cents or 0.34% higher at US$9.60.

 

"Oversold market conditions have futures overdue for a technical recovery, with slow movement of cash supplies due to icy central U.S. conditions helping the market find value at current levels," said Don Roose, president U.S. Commodities.

 

Higher palm oil prices and some stability in crude oil futures are seen aiding the advances, helping override the bearish influence of a firmer U.S. dollar index and lower precious metal futures, Roose said.

 

Additional support is seen from export demand resurfacing from China, with analysts saying the nation maybe booking fresh supplies ahead of the Lunar New Year holidays amid the large drop in prices recently.

 

However, lingering fears that China demand will slow down as the nation tightens its monetary policy in an effort to curb inflation, coupled with a lack of a threat to record projected South American production is seen limiting upside potential.

 

Technical factors and movement in outside markets will be watched closely in an otherwise quiet news front, analysts said.

 

A technical analyst said the next downside price objective for March soybeans is pushing and closing prices below solid technical support at US$9.20. The next upside technical objective is pushing and closing March prices above solid technical resistance at this week's high of US$9.84.

 

The DTN Meteorlogix weather forecast said favorable conditions remains for developing soybeans throughout the major growing areas of Brazil with no significant heat or dryness indicated. In Argentina, there appears to be a below normal rainfall pattern and an above normal temperature pattern during the next 10 days. Temperatures may be hot at times. The hottest and driest areas appear to be La Pampa, western Buenos Aires and southern Cordoba.

 

U.S. Department of Agriculture announced Thursday private exporters reported export sales of 230,000 metric tonnes of soybeans for delivery to China. Of the total, 175,000 metric tonnes is for delivery during the 2010/2011 marketing year and 55,000 metric tonnes is for delivery during the 2009/2010 marketing year, the USDA said Thursday.

 

USDA's weekly export sales report, normally released on Thursday will be postponed until Friday 8:30 a.m., EST, due to Monday's Dr. Martin Luther King Jr. Holiday.

 

In overseas markets, soybean futures fell marginally on the Dalian Commodity Exchange Thursday, with investors still nervous over signs that the government is stepping in to slightly tighten expansionary credit conditions. The September soybean contract settled RMB3 or 0.1% lower at RMB3,878 a metric tonne.

 

Meanwhile, China's soybean imports in December rose 45% on year to 4.78 million metric tonnes, the General Administration of Customs said Thursday. For the full year, soybean imports rose 13.66% to 42.55 million tonnes.

 

Crude palm oil futures on Malaysia's derivatives exchange rebounded Thursday after tumbling to their lowest levels in two months on fresh buying and short covering on cues from a recovery in crude oil and soyoil prices, trade participants said. The April CPO contract on the Bursa Malaysia Derivatives ended MYR44 higher at MYR2,488 a metric tonne.