February 5, 2009

Soybean futures on the Chicago Board of Trade are expected to start Thursday's day session higher, underpinned by smaller South American crop outlooks.

 

CBOT soybean futures are called 8 cents to 10 cents higher.

 

In overnight electronic trading, March soybeans finished 7 1/2 cents higher at US$9.57. March soymeal was US$1.50 higher at US$302.00 per short tonne, while March soyoil ended 12 points higher at 32.47 cents per pound.

 

Declining crop estimates for Brazil and Argentina is seen supporting prices in early action, with extended weather forecasts for Argentina a little drier than Wednesday, serving as catalysts to buoy prices, analysts said.

 

The uncertainty of South American crop prospects is seen attracting short covering interest, a CBOT floor analyst said.

 

Mixed signals from outside markets are expected to keep attention on southern hemisphere outlooks with technical signals watched as well.

 

A technical analyst said the next upside price objective for March soybeans is to push and close prices back above major psychological resistance at US$10.00 a bushel. The next downside price objective is pushing and closing prices below major psychological support at US$9.00 a bushel.

 

First resistance for March soybeans is seen at Wednesday's high of US$9.68 1/4 and then at this week's high of US$9.76 1/4. First support is seen at Wednesday's low of US$9.44 1/4 and then at this week's low of US$9.34 1/2.

 

The DTN Meteorlogix weather forecast said Argentina experienced thunderstorms overnight and more are on tap for Thursday. The rainfall may help some locations that missed out on prior rain chances. Conditions for crops slowly improve, after the early season drought, Meteorlogix said.

 

The National Commodities Supply Corp, or Conab, Thursday estimated Brazil's 2008-09 crop year soybean production at 57.2 million metric tonnes. The number is slightly below Conab's previous estimate Jan. 8, that put the soy crop at 57.7 million tonnes compared with 60 million tonnes from the 2007-08 soy crop. Planted area is seen at 21.2 million hectares in 2008-09 compared with 21.3 million hectares in the 2007-08 season, Conab said.

 

Argentina's 2008/09 soybean production forecast fell to 42.5 million tonnes as a result of smaller harvested area and an expected decline in overall yield due to the severe drought situation, according to a U.S. Department of Agriculture attache report posted Wednesday on the Foreign Agricultural Services Web site. USDA reported Argentina production at 49.5 million tonnes in its supply and demand report Jan 12.

 

USDA reported total weekly soybean export sales were a net 338,900 metric tonnes for the week ended Jan. 29. Sales for 2008-09 were a net 336,600 metric tonnes. Analysts had forecast sales between 400,000 and 700,000 metric tonnes. The primary buyer was China with 166,900 metric tonnes.

 

Soymeal sales were a net 184,000 tonnes. Trade estimates ranged from 75,000 to 220,000 tonnes. Soyoil commitments were 10,100 metric tonnes. Analysts had forecast sales between zero and 20,000 tonnes.

 

U.S. Census Bureau Thursday upwardly revised its December soyoil stocks estimate to 2.660 billion pounds, up from its preliminary estimate of 2.657 billion pounds, according to the Census Bureau's Fats and Oils stocks report. Soyoil consumed for methyl esters-biodiesel was pegged at 194.4 million pounds, down from 234.5 million in November and down from 219.9 million in December 2007.

 

In overseas markets, soybean futures rose amid mixed results among agricultural futures on the Dalian Commodity Exchange Thursday, as an increase in prices on drought-driven supply concerns was tempered by weaker counterparts on CBOT. The benchmark September 2009 soybean contract gained 0.5% to settle at RMB3,482 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange rose for the second successive day Thursday as investors consolidated gains on a likely fall in production. The benchmark April contract on Bursa Malaysia Derivatives ended MYR34 higher at MYR1,879 a metric tonne.