March 19, 2009
CBOT Soy Outlook on Thursday: Soybeans boosted as fed pressures dollar
A 25- to 30-cent rise in soybean futures on the Chicago Board of Trade is expected Thursday due to a new Federal Reserve plan that pressures the value of the U.S. dollar and boosts equities.
In overnight electronic trading, May soybeans rose 29 cents to US$9.44 a bushel. The July contract added 29 3/4 cents to US$9.41 1/2 and November soybeans gained 28 cents to US$8.84. May soymeal gained US$8.30 to US$297.80 a short tonne and May soyoil jumped 88 points to 31.8 cents a pound.
The Fed announced after soy futures closed Wednesday that it plans to buy US$300 billion in long-term U.S. Treasury securities in a bid to extend credit-loosening activities beyond the effects of a near-zero benchmark interest rate. The Fed will also invest hundreds of billions in mortgage-backed securities. The dollar fell sharply on the news.
"Soybeans should lead the market higher again this morning, after surging in the overnight session," said Bryce Knorr, Farm Futures senior editor, in a Thursday morning commentary.
"May futures are starting to challenge resistance around US$9.50, as strong old-crop demand remains the fundamental driver for the market," he said, noting a more bullish mood among China's soybean processors.
"The market remains apprehensive about the future of supplies out of Argentina, due to the ongoing dispute over export taxes between farmers and the government," Knorr noted.
The U.S. sold 339,800 tonnes of soybeans in the week ended March 12, including 143,300 tonnes of old-crop product, the U.S. Department of Agriculture said in its weekly export sales report released Thursday.
Analysts expected export sales for the week to range from 350,000 to 900,000 metric tonnes, according to a Dow Jones survey.
Soymeal export sales totaled 74,200 metric tonnes, including 33,400 in old-crop product, the USDA said. Analysts forecast sales to range from 75,000 to 150,000 metric tonnes.
Soyoil exports sales were negative 8,000 tonnes for the week after cancellations from Mexico and other unknown buyers, the USDA said.
Analysts estimated soyoil sales at 5,000 to 15,000 tonnes.
On the technical side, soybeans closed at a four-week high Wednesday and bulls retain upside near-term momentum with prices in a three-week-old uptrend on the daily bar chart, a market technician said.
"After the [Fed's Federal Open Market Committee] announcement, the U.S. dollar was hammered lower and the stock market rallied, so that should provide the bulls with extra upside momentum on Thursday morning," he said.
Market bulls are looking to close prices above solid technical resistance at US$9.40 a bushel, the technician said, marking first resistance at this week's high of US$9.21 3/4, then US$9.30.
The bears are working to close May soybeans below solid technical support at the March low of US$8.38 1/4 a bushel, he said, pegging first support at Wednesday's low of US$9.09, then US$9.
In other global trading news, China's soybean futures trading on the Dalian Commodity Exchange settled slightly higher Thursday, following the rise on the Chicago Board of Trade overnight.
The benchmark September 2009 soybean contract settled RMB14 a metric tonne higher at RMB3,522 a tonne, or up 0.4%, after trading between RMB3,510 and RMB3,538 a tonne during the session.
Crude palm oil futures on Malaysia's derivatives exchange gave up most intraday gains Thursday and fell below 1,900 ringgit a tonne for the first time this week on a likely fall in overall exports and reports that India has scrapped its import duty on soyoil, said trade participants.
Soyoil's share in India's overall import basket, which has fallen considerably over the last few months, may now start to gradually rise again at the expense of palm oil and sunflower oil, they said.
The benchmark June contract on Bursa Malaysia Derivatives, which traded up to MYR1,945 a metric tonne during the morning session, ended only MYR6 higher at MYR1,911 a tonne after falling as low as MYR1,893.
