March 27, 2008

 

CBOT Soy Outlook on Thursday: Down 3-7 cents, consolidates after recent surge

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's day session on the defensive, backpedaling in line with overnight declines on a consolidative setback from the sharp gains absorbed in the past three days, analysts said.

 

CBOT soybean futures are called to start the session 3 to 7 cents lower.

 

In overnight electronic trading, May soybeans were 7 cents lower at US$13.45, July soybeans were 10 cents lower at US$13.55 1/2. May soyoil was 1 point lower at 57.74 cents per pound and May soymeal was US$1.90 lower at US$353.60 per short tonne.

 

The market is poised for a modest technical correction off the sharp gains earlier in the week, but with supportive underlying influences, declines should remain limited, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

"The Argentina farmer's strike seems a little more inflammatory than Wednesday, and weekly export sales and Census crush data shows demand is still alive and well for soybeans and the soy products," Roose added.

 

Argentina's farmers strike is expected to divert export demand from Argentina to the U.S. and other sources, analysts said.

 

Nevertheless, traders anticipate some position squaring to emerge heading toward Monday's planting and stocks reports and with overnight declines in Asian markets, light profit taking may weigh on prices in early trade, analysts added.

 

In addition, light speculative liquidation may also stem from higher margins on CBOT soybeans and soyoil that took affect Thursday. Soybean initial margins were raised to US$4,388, up from US$3,375 a contract. Soyoil initial margins increased to US$1,890, up from US$1,620 a contract.

 

A technical analyst said some recent chart damage was repaired Wednesday, but still not all. The next upside price objective for July soybeans is to push and close prices above psychological resistance at US$14 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$13.22, which would fill on the downside Wednesday's upside price gap on the daily bar chart.

 

First resistance for July soybeans is seen at Wednesday's high of US$13.72 and then at US$13.75. First support is seen at US$13.50 and then at Wednesday's low of US$13.35.

 

U.S. Department of Agriculture reported total weekly soybean export sales were 532,300 metric tonnes for the week ended March 20. 2007-08 marketing year sales totaled 369,600 tonnes. The sales were primarily for China with 239,900 metric tonnes, and Spain with 65,000 tonnes. Analysts had forecast sales between 300,000 and 700,000 metric tonnes.

 

Soy meal sales were a net 178,800 tonnes, above trade estimates of 100,000 to 150,000 tonnes. Soy oil commitments were 42,000 metric tonnes, above trade estimates of 10,000 to 20,000 tonnes.

 

The U.S. Census Bureau pegged the February crush at 146.4 million bushels, down from the January crush figure of 160.5 million bushels. In a survey of analysts, the average of estimates was 146.1 million bushels. February soy meal stocks were reported at 335,781 short tonnes, up from the 288,508 tonnes in January, as well as above the average of estimates at 305,000. Soy oil stocks came in at 2.681 billion pounds, down from January stocks of 3.061 billion and below the average estimate of 2.975 billion pounds.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Thursday despite positive factors, including an ongoing strike by farmers in Argentina and tight global vegetable oil supply. The benchmark January 2009 soybean contract settled RMB45 lower at RMB4,249 a metric tonne after trading between RMB4,201 and RMB4,268/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday, tracking weak soyoil futures and fears that India might cut its import duty on soyoil, trade participants said. The benchmark June contract on Bursa Malaysia Derivatives ended MYR60 lower at MYR3,640/tonne, having traded in negative territory throughout the day.

 

A panel of Indian federal ministers will soon meet to discuss reducing import duty on soybean oil to tame rising inflation, a senior government official said Thursday. The current import duty on crude soy oil is 40%.