January 28, 2010

 

CBOT Soy Outlook on Thursday: Up slightly amid solid demand data

 

 

Chicago Board of Trade soybean futures are expected to open slightly higher Thursday following overnight gains and signs of continued solid demand.

 

Soybeans are called 1 to 2 cents higher. In overnight trade, March soybeans were up 2 cents to US$9.31 per bushel.

 

March soymeal was down US$0.50 to US$280.80 per short tonne while March soyoil was up 14 points to 36.46 cents per pound.

 

Export sales and soybean crush estimates released by the government Thursday showed strong demand for soybeans, although the figures were mostly in line with expectations, analysts said.

 

"You've got a situation where the meal and the soybean oil and the soybeans all continue to show very good demand," said Mike Zuzolo, president of Global Commodity Analytics and Consulting. But he added that outside factors, namely bearish reports Thursday morning on durable goods and jobless claims, could limit the market's upside.

 

The amount of soybeans crushed in December was in line with industry expectations, according to data issued by the U.S. Census Bureau.

 

The bureau says 173 million bushels were crushed, compared to the average of analyst estimates of 172.9 million and to 168.6 million in November.

 

Soymeal stocks slipped to 571,554 short tonnes in December from 633,700 tonnes in November. Meal stocks are still large and came in above the average analyst estimate of 491,000 tonnes. That could inspire traders to buy CBOT soyoil and sell CBOT soymeal, a CBOT floor analyst said.

 

The bureau says soyoil stocks were 2.935 billion pounds, compared to the average analyst estimates of 3.077 billion and to 2.904 billion in November.

 

The U.S. Department of Agriculture reported weekly net soybean export sales of 857,100 metric tonnes, including 673,500 tonnes for the 2009-10 marketing year. Analysts were expecting sales between 700,000 and 900,000.

 

Weekly net soymeal exports were within trade expectations at 268,200 metric tonnes, and soyoil sales, at 46,000 tonnes, exceeded expectations.

 

The supply side remains bearish, traders said, due to the prospect of a large South American crop.

 

"To turn the bean supply issue bullish I think it would probably mean you'd need to see a missed rain" in Argentina, Zuzolo said.

 

March soybeans Wednesday closed lower, near the session low and hit a fresh 3 1/2-month low, a technical analyst said.

 

The next downside price objective for the bears is pushing and closing prices below major psychological support at US$9.00, the technical analyst said. The next upside technical objective for the bulls is pushing and closing March prices above solid technical resistance at US$9.60.

 

First resistance for March soybeans is seen at US$9.40 and then at Wednesday's high of US$9.46 1/2. First support is seen at Wednesday's low of US$9.28 1/2 and then at US$9.20.

 

In other markets, soybean futures fell on the Dalian Commodity Exchange Thursday, weighed down by ongoing concerns over tightening credit conditions and potential oversupply from likely record harvests in South America.

 

The benchmark September soybean contract settled RMB55 or 1.4% lower at RMB3,865 a metric tonne.

 

Also, crude palm oil futures on Malaysia's derivatives exchange ended higher Thursday as investors covered shorts on a likely rise in exports in January.