March 1, 2007

 

CBOT Soy Outlook on Thursday: Down 6-8 cents on e-CBOT, outside pressure

 

 

Chicago Board of Trade soybean futures are expected to start Thursday's day session lower on follow-through selling from weaker overnight trade, floor traders said.

 

May soybean futures are called to open 6 to 8 cents lower per bushel.

 

May soybeans finished the overnight electronic session down 7 1/4 cents at US$7.80 1/4.

 

In the absence of fresh news for soybeans, weakness in other markets is expected to weigh on soybean prices, a floor broker said. The Shanghai stock market, for one, was down overnight, he noted.

 

Market participants are seen as jittery after broad-based selling Tuesday led to heavy losses, traders said.

 

There also could be some pressure on soybeans from weak corn export sales, a trader added.

 

The U.S. Department of Agriculture reported corn sales for the week ended Feb. 22 totaled 318,000 metric tonnes, sharply below analysts' estimates that sales would be 600,000 to 800,000 tonnes.

 

Weekly soybean export sales, meanwhile, were within trade estimates.

 

The USDA said sales were 415,500 metric tonnes, while analysts had expected sales of 300,000 to 500,000 tonnes. The sales were 38% below the week earlier and 33% under the prior 4-week average, according to the USDA.

 

Top buyers included China, which took 244,600 tonnes, and Mexico, which bought 123,900 tonnes, the USDA said.

 

Weekly soymeal sales, however, were a marketing-year low at 800 tonnes, the USDA said. Analysts had predicted sales would be 75,000 to 150,000 tonnes. Soyoil sales were 8,900 tonnes, above industry estimates of zero to 5,000 tonnes.

 

The decline in soybeans futures overnight came after soybeans ended solidly higher in Wednesday's day session.

 

Bulls would regain fresh upside technical momentum by filling on the upside this week's downside price gap on the daily bar chart, a technical analyst said. That means pushing prices back to US$7.93 1/2, he said.

 

The next major upside price objective for the soybean bulls is to close May prices above solid resistance at the contract high of US$8.07 1/2, the technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$7.60.

 

First resistance is seen at US$7.90 and then at US$7.93 1/2. First support is seen at Wednesday's low of US$7.77 1/2 and then at this week's low of US$7.73.

 

Underlying support for the market remains from expectations that U.S. farmers will plant millions more acres of corn this year, largely at the expense of soybeans, to take advantage of sharp demand for ethanol, an analyst said.

 

The USDA now expects farmers to plant 87 million acres of corn in 2007 and produce 12.2 billion bushels of the grain, the department's Chief Economist Keith Collins said Thursday at the annual Agricultural Outlook Forum.

 

The acreage and production estimates are up from the USDA's baseline projections, which were released on Feb. 14. In the baseline projections, the USDA had estimated 2007-08 corn area at 86 million acres and production at 12.065 billion bushels.

 

In other news, there are some concerns that wet conditions in Argentina could hamper field work, DTN Meteorlogix said. Thunderstorms linger into early Thursday and then it should be drier, the weather firm added.

 

Soil moisture should be adequate for needs of crops, the firm said.

 

In Brazil, drier weather through north and central locations will favor early crop harvests and maturing crops, while rain in the far south could still favor pod filling soybeans, Meteorlogix reported.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Thursday, tracking gains at the CBOT. However, a trader said he expected soybean prices to be under pressure in the near term as the soybean harvest in South America is going smoothly.

 

China's 2007 soybean imports are expected to exceed 30 million tonnes, up from 28.27 million tonnes last year, the Dalian cited a government think tank as saying Thursday. The increase will mainly be due to continued growth in the country's soybean crushing capacity, the exchange said in a statement.

 

Crude palm oil futures on the Bursa Malaysia Derivatives, meanwhile, ended lower Thursday as renewed losses on other commodity and financial markets hurt sentiment. Traders said weakness in CBOT soy complex futures in after hours electronic trading and fresh declines on regional stock markets, just days after one of the biggest losses in years, unnerved market participants.