February 7, 2008

 

CBOT Soy Outlook on Thursday: Down 4-6 cents on carryover technical selling

 

 

Soybean futures on the Chicago Board of Trade are expected to open Thursday's day session lower, pressured by carryover weakness from Wednesday's weak technical close.

 

CBOT soybean futures are called to start the session 4 to 6 cents lower.

 

In overnight e-CBOT trading, March soybeans were 6 cents lower at US$13.12 1/2, July soybeans were 7 1/4 cents lower at US$13.44 1/2, and November soybeans were 9 3/4 cents lower at US$12.69 3/4.

 

The exhaustion of buying at limit up levels Wednesday and subsequent slide into negative territory is seen having a bearish influence on prices, with lingering recessionary fears enticing traders into taking a cautious approach after prices galloped to all-time highs, analysts said.

 

Improved weather conditions for South American crops are seen weighing on prices also, analysts added.

 

The market has reached uncharted territory and without fresh bullish stimulus to keep buyers enthused, futures are looking top heavy, a CBOT floor broker said.

 

However, longer range bullish fundamentals with tightening stocks, acreage uncertainties and stout export demand should limit downside pressure, analysts said. Spillover from corn and wheat futures will provide strength also, traders said.

 

Higher-than-expected weekly export sales are expected to lend support to temper bearish technical influences as well, traders added.

 

A technical analyst said Wednesday's low-range close produced a potentially bearish buying exhaustion tai" on the daily bar chart, whereby buying interest dried up at higher price levels and prices then backed way off the high. Follow-through selling on Thursday would confirm the exhaustion tail.

 

The next upside price objective for March soybeans is to push and close prices above solid resistance at the contract and all-time high of US$13.73 a bushel. The next downside price objective is pushing prices below psychological support at US$13.00. First resistance for March soybeans is seen at US$13.28 and then at US$13.41. First support is seen at Wednesday's low of US$13.16 and then at US$13.00.

 

U.S. Department of Agriculture reported total weekly soybean export sales were 1,068,000 metric tonnes for the week ended Jan. 31. 2007-08 marketing year sales totaled 1,037,000 tonnes. The sales were primarily for China with 503,700 metric tonnes, and Mexico with 148,700 tonnes. Analysts had forecast sales between 500,000 and 900,000 metric tonnes.

 

Soymeal sales were a net 368,100 tonnes, above trade estimates of 100,000 to 150,000 tonnes. 2007-08 sales totaled 365,800 tonnes. The sales were a marketing year high, with Venezuela a buyer of 73,700 metric tonnes, and Mexico a buyer of 60,500 tonnes. Soyoil commitments were 40,900 metric tonnes, within trade estimates of 10,000 to 70,000 tonnes.

 

The DTN Meteorlogix Weather Service said heavy rains continue to raise concerns for maturing soybeans in Brazil's Mato Grosso and Goias; however, it isn't as wet in Mato Grosso as it has been. Scattered rains in the southern belt during this weekend will maintain favorable growing conditions, Meteorlogix reports.

 

In Argentina, there still appears to be a fair to good chance for significant thundershower activity during the next 24-48 hours, and this should favor developing crops, Meteorlogix added.

 

In other news, India soymeal exports during October-January were 1.98 million metric tonnes, up 14% from the year-ago period due to increased demand from Vietnam and Japan, the Soybean Processors Association of India said Thursday. Exports of soymeal in January were 724,526 tonnes, up 35% from January 2007, the association said.

 

In overseas markets, soybean and corn futures traded on the Dalian Commodity Exchange will be closed Feb. 6-12. The exchange is closed for the Chinese New Year holiday. Asian crude palm oil futures are closed Feb. 7-8 for the Lunar New Year holiday as well.