March 7, 2008

 

CBOT Soy Outlook on Friday: Down 35-45 cents; overnight theme, spec sales

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's day session sharply lower, extending the overnight theme, with speculative long liquidation featured.

 

CBOT soybean futures are called to start the session 35 to 45 cents lower.

 

In overnight electronic trading, May soybeans were 44 1/2 cents lower at US$14.14 1/4, July soybeans were 44 1/4 cents lower at US$14.26 3/4. May soyoil was 200 points lower at 63.33 cents per pound and May soymeal was US$6.30 lower at US$364.00 per short tonne.

 

The combination of spillover weakness from limit down soyoil futures, lower Asian markets overnight and overbought conditions have speculative funds looking to trim some length heading into the weekend, analysts said.

 

Rumors of China selling vegoil supplies in the cash market weighed heavily on world edible oil prices overnight, traders said.

 

The limit down drop in soyoil will elicit selling across the soy complex, with concerns over slowing export demand as South American supplies adding to the defensive tone, analysts added.

 

Speculative funds are seemingly locking in profits in soyoil futures before the harvest of the South American soybean crop next month, a trader said.

 

Meanwhile, production prospects have improved notably in South America, where total soybean output may turn out to be 1.0 million-1.6 million tonnes higher than earlier expectations, said Hamburg-based publication Oil World.

 

Technical pressure will further the losses also, with pre-placed sell orders activated as prices penetrate support levels, as traders opt out of positions before they near out of pocket losses, a CBOT broker added.

 

Talk of large commercial firms not accepting hedge-to-arrive contracts in the cash market amid ideas commodity prices are to high is seen adding some underlying pressure to prices as well, said Jason Roose, analyst with U.S. Commodities in West Des Moines, IA.

 

A technical analyst said Thursday marked the fourth session in a row of a low-range close, and that's worrisome for market bulls. The next upside price objective for July soybeans is to push and close prices above major psychological resistance at US$15.00 a bushel. The next downside price objective is pushing and closing prices below solid support at US$14.50.

 

First resistance for July soybeans is seen at US$14.85 and then at US$15.00. First support is seen at US$14.62 and then at US$14.50.

 

In deliveries, March soybean deliveries totaled 1,245 lots. Customer accounts at Man Professional Clearing issued and stopped 611 and 648 lots respectively. The last trade date assigned was March 6.

 

March soymeal deliveries totaled 326 lots. A customer account at Man Professional Clearing issued 325 lots. The last trade date assigned was March 4.

 

March soyoil deliveries totaled 1,778 lots. Customer accounts at Man Professional Clearing issued and stopped 847 and 652 lots respectively. The last trade date assigned was March 6.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended at a two-week low Friday, after one large trading company set up short positions, taking cues from limit-down soyoil prices and improving prospects for the South American soybean crop, trade participants said. The benchmark May contract on Bursa Malaysia Derivatives ended MYR293 lower at MYR3,710 a metric tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled sharply lower Friday as speculative investors have been withdrawing funds from the market. The benchmark January 2009 soybean contract settled RMB91 lower at RMB4,634 a metric tonne.

 

Cash soybean prices in China's major producing regions were lower in the week to Friday on falling soybean futures prices.

 

Meanwhile, China's soybean acreage in the north eastern Heilongjiang province, which accounts for one-third of the country's total output, will likely more than double in 2008 from last year, an official from the province said Friday. Heilongjiang will likely have around 4.53 million hectares under soybean cultivation this year, up from 2.00 million hectares last year, said Sui Fengfu, chief of the General Bureau of State Farms in the province.