February 19, 2010

 

CBOT Soy Outlook on Friday: Seen lower on dollar strength

 

 

Soybean futures on the Chicago Board of Trade are expected to open Friday's day session lower, extending the overnight theme on pressure from a stronger U.S. dollar.

 

CBOT soybeans are seen opening 4 cents to 6 cents lower.

 

Overnight, CBOT March soybeans ended 6 cents lower at US$9.42 a bushel, and May soybeans were 5 3/4 cents lower at US$9.51 3/4.

 

The U.S. Federal Reserves' raising of the discount rate to 0.75% from 0.50% Thursday sparked a rally in the U.S. dollar, sending commodity markets backpedaling overnight.

 

The bearish theme is seen carrying over into the day session, as traders look to avert risk on fears of reduced liquidity in the market amid the monetary tightening move by the Fed, a CBOT floor analyst said.

 

Speculative selling is expected to remain a feature, as the markets suffer from a lack of positive fundamental news while technical trends weaken, analysts added.

 

A bearish world supply outlook continues to serve as a negative influence, but funds are net short and end users have found futures attractive on price breaks. Meanwhile, mild support may arise from strong export sales for soymeal and soyoil.

 

A technical analyst said the next downside price objective for March soybeans is to push and close prices below solid technical support at last week's low of US$9.18 3/4. The next upside technical objective is to push and close March prices above major psychological resistance at US$10.00.

 

Options on March soy futures expire Friday.

 

U.S. 2010-11 soybean production is seen at 3.26 billion bushels, with planted area estimated at 77 million acres, according to the U.S. Department of Agriculture. Soy yield this year is seen at 42.9 bushels per acre, the USDA said in a grains and oilseeds outlook released Friday at its annual Agricultural Outlook Forum. Regarding demand, the government said soybean crush would be 1.655 billion bushels while soybean exports are seen at 1.325 billion bushels. Ending stocks are seen at 330 million bushels.

 

USDA reported total weekly soybean export sales were a net 203,900 metric tonnes for the week ended Feb. 11, with 203,600 tonnes--a marketing-year low--sold for delivery in the 2009-10 marketing year. The primary buyer was Mexico at 117,700 metric tonnes. Analysts had forecast sales between 250,000 and 500,000 metric tonnes.

 

USDA reported 1.119 million metric tonnes were shipped in the week ended Feb. 11, down 7% from the previous week and 17% from the prior four-week average. The primary destination was China with 561,200 tonnes.

 

Soymeal 2009-10 sales were a net 242,400 tonnes. Trade estimates ranged from 75,000 to 150,000 tonnes. Soyoil commitments were 46,700 metric tonnes. Analysts had forecast sales between 10,000 and 20,000 tonnes.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended lower Friday after the U.S Federal Reserve's decision to raise its discount rate pushed the dollar higher. The May CPO contract on the Bursa Malaysia Derivatives ended MYR4 lower at MYR2,596 a metric tonnes.

 

Soybean futures traded on the Dalian Commodity Exchange were closed for the Lunar New Year holiday.

 

Rotterdam soybean prices were lower while soymeal prices were steady to lower. European vegoil prices were mixed.