March 20, 2008

 

CBOT Soy Outlook on Thursday: Limit down 50 cents; funds liquidate length

 

 

Chicago Board of Trade soybean futures are expected to start Thursday's day session limit down 50 cents, continuing the overnight theme amid the extension of the fund liquidation theme that has weighed on commodities recently.

 

In overnight electronic trading, May soybeans were 50 cents lower at US$12.07, July soybeans were 50 cents lower at US$12.22. May soyoil was 178 points lower at 54.62 cents per pound and May soymeal was US$5.80 lower at US$304.90 per short tonne.

 

Broad based commodity-wide selling is seen pinning prices at their lower daily trading limits in early action, as market fundamentals remain in the shadows of the speculative fund sell-off due to U.S. and global economic turmoil, analysts said.

 

The selling is seen across all commodities, with a firmer U.S. dollar and sharply lower crude oil and metal futures setting the stage for prices to continue to plunge, analysts added.

 

However, traders said the market is overdue to find some stability, and with an extended holiday weekend on tap, short covering may emerge during the session, a CBOT floor broker said.

 

CBOT markets will be closed Friday in observance of the Good Friday holiday.

 

A technical analyst said very serious near-term chart damage has been inflicted recently, including more Wednesday, to suggest a near-term market top is in place. A V-Top reversal pattern has formed on the daily bar chart.

 

The next upside price objective for July soybeans is to push and close prices above psychological resistance at US$13.00 a bushel. The next downside price objective is pushing and closing prices below solid support at the January low of US$12.20 3/4. First resistance for July soybeans is seen at Wednesday's high of US$12.88 and then at US$13.00. First support is seen at this week's low of US$12.68 3/4 and then at US$12.50.

 

U.S. Department of Agriculture reported total weekly soybean export sales were 504,400 metric tonnes for the week ended March 13. 2007-08 marketing year sales totaled 438,400 tonnes. The sales were primarily for Mexico with 103,700 metric tonnes, and China with 78,800 tonnes. Analysts had forecast sales between 200,000 and 450,000 metric tonnes.

 

Soymeal sales were a net 188,300 tonnes, above trade estimates that ranged from 75,000 to 125,000 tonnes. Soy oil commitments were 23,900 metric tonnes, above trade estimates of 5,000 to 20,000 tonnes.

 

In overseas markets, soy futures traded on the Dalian Commodity Exchange settled sharply lower Thursday on a plunge in CBOT soy futures Wednesday. Soybean, soymeal and soyoil contracts mostly opened 4% limit-down but were off lows in the late session as analysts said higher cash values lent support. The benchmark January 2009 soybean contract fell RMB146 to settle at RMB4,089 a metric tonne.

 

Crude palm oil futures traded on Malaysia's derivatives Exchange were closed Thursday for a public holiday.