March 18, 2010

 

CBOT Soy Outlook on Thursday: Down 9-11 cents on dollar, weak fundamentals

 

 

Chicago Board of Trade soybeans are expected to open lower Thursday, giving back Wednesday gains that were mostly attributed to short-covering, analysts said.

 

Soybeans are called 9 cents to 11 cents lower. In overnight trade, May soybeans were down 10 cents to US$9.49 per bushel and July soybeans were down 10 3/4 cents to US$9.56.

 

May soymeal was down US$3.10 to US$264.30 per short tonne and May soyoil was down 57 points to 39.26 cents per pound.

 

The market posted gains for a third straight day Wednesday, but open interest dropped on the move, reinforcing the notion that gains were due to short-covering. With the dollar seemingly poised to rebound Thursday thanks to worries about the Euro, soybeans and other commodities will likely face more pressure.

 

Fundamentals are weak for the market, analysts said. Very large South America supplies are on the way, and analysts note weather forecasts are mostly favorable for the harvest there.

 

Benson Quinn Commodities analyst Kim Rugel added in a commentary that recent futures gains have come despite weaker cash bids at export terminals, a sign that futures could retreat Thursday.

 

Weekly export sales were better than expected. The U.S. Department of Agriculture said that soybean net sales for the week ended March 11 totaled 739,100 metric tonnes. Of that, 525,000 tonnes was for the 2010-11 marketing year. Analysts estimates for sales had ranged from 110,000 to 600,000 tonnes. The prior week had seen a net loss of 50,700 metric tonnes.

 

Analysts said the market had been bracing for weak sales due to cancellation of Chinese shipments.

 

Soymeal sales totaled 158,300 metric tonnes, up from just 2,200 tonnes the prior week, and above trade guesses that ranged from 25,000 to 100,000 tonnes. Soyoil sales were also stronger, at 18,400 tonnes, versus expectations of 15,000 tonnes or less and a net loss of 9,400 tonnes the prior week.

 

Soybean bears still have the slight near-term technical advantage, technical analyst Jim Wyckoff said, but he added that bulls have gained some fresh upside momentum this week.

 

The next downside price objective for the bears is pushing and closing prices below solid technical support at last week's low of US$9.21 3/4, Wyckoff said. The next upside technical objective for the bulls is pushing and closing May prices above solid technical resistance at the February high of US$9.85.

 

First resistance for May soybeans is seen at Wednesday's high of US$9.62 1/4 and then at the March high of US$9.71 1/2. First support is seen at US$9.50 and then at Wednesday's low of US$9.42.

 

In international markets, soybean futures fell on the Dalian Commodity Exchange Thursday, along with a broad commodity retreat as the dollar strengthened and China equities were still jittery over credit concerns.

 

The benchmark September soybean contract settled RMB6 or 0.2% lower at RMB3,842 a metric tonne.

 

Also, crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday as crude oil and soyoil futures weakened, trade participants said.

 

The benchmark June contract on Bursa Malaysia Derivatives ended MYR60 lower at MYR2,535 a metric tonne, after trading in a range of MYR2,528-MYR2,587.