May 8, 2008

 

CBOT Soy Outlook on Thursday: Down 1-3 cents; overnight, pre-report positioning

 

 

Chicago Board of Trade soybean futures are poised to start Thursday's day session slightly lower, easing back from Wednesday's advances on a lack of fresh supportive news and pre-crop report positioning.

 

CBOT soybean futures are called to start the session 1 to 3 cents lower.

 

In overnight electronic trading, July soybeans were 1 cent lower at US$13.08, November soybeans were 2 cents lower at US$12.43 1/2. July soyoil was 21 points lower at 58.95 cents per pound and July soymeal was US$0.20 lower at US$334.00 per short tonne.

 

The market will take its lead from the overnight theme in the absence of new fundamental news to extend Wednesday's advances, with lackluster weekly export sales, and ideas the Argentina farmers' protest is already priced in the market, opening the door for a setback, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

There are mixed signals from outside markets, with lower crude oil, higher gold futures and a firmer U.S. dollar promoting a choppy tone, analysts said.

 

Weather issues remain an underlying feature, as outlooks for lingering planting delays across the Midwest continue to promote ideas of swing acres moving to soybeans from corn, analysts added.

 

A technical analyst said market bulls and bears are now back on a level near-term technical playing field. The next downside price objective for July soybeans is pushing and closing prices below solid technical support at this week's low of US$12.75. The next upside price objective is to push and close prices above solid technical resistance at US$13.50 a bushel.

 

First support for July soybeans is seen at US$13.00 and then at US$12.90. First resistance is seen at US$13.12 and then at this week's high of US$13.33.

 

Meanwhile, Argentina's farmers announced an eight-day strike Wednesday after a month of talks with the government over a controversial tax hike on soybean exports broke down.

 

Farmers will refuse to buy or sell grain for export, but will not block domestic food transport as they did during a three-week strike in March that left supermarket shelves bare of many basic foods, farm leaders said at a press conference Wednesday. However, regional farm groups announced that they would go ahead and block roads, despite the directive from the national farm group leaders.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were 280,600 metric tonnes. 2008-09 sales totaled 239,600 tonnes or 8.8 million bushels for the week ended May 1. Analysts had forecast sales between 150,000 and 350,000 metric tonnes. The 2008-09 sales were primarily for unknown destinations with 118,000 metric tonnes, China with 55,000 tonnes, and Japan with 50,000 tonnes.

 

Soymeal sales were a net 134,100 tonnes, within trade estimates of 50,000 to 150,000 tonnes. Soyoil commitments were 11,900 metric tonnes, within trade estimates of 5,000 to 15,000 tonnes.

 

May soybean deliveries totaled 99 lots. A customer account at Astro Division of UBS Securities issued all 99 lots, with a customer account at Banc of America Securities stopping all 99. The last trade date assigned was April 23.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Thursday on Wednesday's CBOT soybean rally. The benchmark January 2009 soybean contract settled RMB38 higher at RMB4,202 a metric tonne, up 0.9%, after trading in the RMB4,167-4,226/tonne range.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 3.04% higher Thursday, tracking a fresh 8-day strike by Argentine farmers against higher export taxes, expectations of strong demand in the cash market and strong gains in soybean oil and crude oil prices, said trade participants. The benchmark July contract on the Bursa Malaysia Derivatives ended above the crucial psychological resistance of MYR3,400 a metric tonne for the first time in seven trading days.