June 4, 2009

 

CBOT Soy Outlook on Thursday: Up 10-12 cents; losses overdone, outside markets

 

 

Soybean futures at the Chicago Board of Trade are expected to start Thursday's day session higher, bouncing on market perceptions Wednesday's sharp declines were overdone.

 

CBOT soybean futures are seen opening 10 cents to 12 cents higher, with soy product futures following overnight price action.

 

Supportive outside market influences, with a weaker dollar and higher crude oil as well as trade ideas Wednesday's profit taking setback was overdone, should provide early support to prices, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

Lackluster weekly export sales may temper upside enthusiasm, as the report revealed China canceled some previous old crop purchases.

 

However, the confirmation of the China cancellation has been widely anticipated by the market, and should not be a surprise to the trade, Lespinasse said.

 

Cool, wet weather in the eastern Midwest remains a threat to plantings, and that is seen as a bearish influence on new crop futures, as it raises the potential for more acres shifting to soybeans.

 

The movement of the July/November bull spread Wednesday, despite heavy declines in flat price, shows just how tight the market perceives old crop stocks will be at the end of the marketing year in August, Lespinasse added.

 

The July/November bull spread settled at US$1.35 a bushel Wednesday, up from Tuesday's settlement of US$1.26 1/2 cents.

 

A market technician said first resistance for July soybeans is seen at US$12.00 and then at Wednesday's high of US$12.12 3/4. First support is seen at Wednesday's low of US$11.81 and then at US$11.75.

 

DTN Meteorlogix Weather said increasing rain chances for the northern part of the western Midwest region will ease concerns after the recent drier weather pattern in the area. Meanwhile, wet weather through the southern and eastern Midwest will continue to slow late spring field work.

 

U.S. Department of Agriculture reported total weekly soybean export sales were a net 36,500 metric tonnes for the week ended May 28. Sales for 2008-09 were a net sales reduction of 24,000 metric tonnes. Analysts had forecast sales between 200,000 and 600,000 metric tonnes.

 

Soymeal sales were a net 159,700 tonnes. Trade estimates ranged from 75,000 to 250,000 tonnes. Soyoil commitments were 3,900 metric tonnes. Analysts had forecast sales between 5,000 and 15,000 tonnes.

 

The U.S. Census Bureau Thursday upwardly revised its April soyoil stocks estimate to 3.159 billion pounds, up from its preliminary estimate of 3.134 billion pounds, according to the Census Bureau's Fats and Oils stocks report.

 

In overseas markets, a sharply stronger dollar sent agricultural futures lower on the Dalian Commodity Exchange on Thursday. The benchmark January 2010 soybean contract fell 0.7% to settle at RMB3,720 a metric tonne. Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday on fears that exports may not keep up with rising output, said trade participants. The benchmark August contract on the Bursa Malaysia Derivatives ended MYR6 lower at MYR2,569 a metric tonne.