June 11, 2009

 

CBOT Soy Outlook on Thursday: Up on tight supplies, overnight gains

 

 

Chicago Board of Trade soybeans are expected to open higher Thursday as the market continues to get strength from bullish old crop fundamentals, analysts said.

 

Soybeans are called 5 to 10 cents higher. In overnight trading, July soybeans were up 14 cents to US$12.60 per bushel and November soybeans were up 5 1/4 cents to US$10.84 1/2.

 

July soymeal was up US$5 to US$418.40 per short tonne, and July soyoil was up 29 points to 38.90 cents per pound.

 

A lower dollar and higher equities supported the overnight gains, but outside markets appear to be mixed this morning, traders and analysts said. Without any strong outside influence or compelling news, the market will maintain its current momentum, which is higher.

 

"I think you give the bulls the benefit of the doubt this morning," said Vic Lespinasse, an analyst for grainanalyst.com.

 

The dominant story for soybeans is the tight old crop supply, which was highlighted by Wednesday's supply and demand report, which cut projected 2008-09 ending stocks to 110 million bushels. Although that was within trade estimates, analysts say the tight supply will continue to give the market support.

 

The market made a new high close Wednesday and made another new high overnight.

 

"The July bean contract reached another nine-month high during overnight trade as it continues to build on its rally due to shrinking old crop supplies," Country Hedging analyst Kayla Hoffman said in a market commentary.

 

Farm Futures analyst Arlan Suderman said "the over-riding concern of this market is to sufficiently ration old-crop demand to keep the supply pipeline functioning."

 

Weekly net export sales for soybeans were reported at 219,100 metric tonnes. That included a net reduction of 61,000 metric tonnes for 2008-09, and a net increase of 280,100 tonnes for 2009-10, according to the U.S. Department of Agriculture. Analysts had estimated sales between 200,000 and 300,000 tonnes for both years combined, and last week's total was 36,500 bushels.

 

Soyoil exports were reported at 10,300 metric tonnes, slightly above trade expectations and higher than last week's tally of 3,900 metric tonnes. Soymeal exports were reported at 120,200 metric tonnes, the USDA said, at the high end of trade expectations but below last week's total of 159,700 metric tonnes.

 

In other export news, South Korea's Nonghyup Thursday issued tenders for 275,000 metric tonnes of corn, 55,000 tonnes of feed wheat and 110,000 tonnes of soybean meal, a trader with the company said Thursday.

 

The cargos are expected to arrive between October and December.

 

"Origin-wise we are looking worldwide, though we are specifically looking at the U.S. for the corn, Eastern Europe for the wheat and South America for the soybean meal," the trader said.

 

The next upside price objective for the bean bulls is to push and close prices above major psychological resistance at US$13.00 a bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at last week's low of US$11.77 a bushel.

 

First resistance for July soybeans is seen at Wednesday's high of US$12.55 1/2 and then at US$12.75. First support is seen at Wednesday's low of US$12.37 1/2 and then at US$12.25.

 

In international markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Thursday as the market shrugged off Wednesday's USDA supply and demand report.

 

The benchmark January 2010 soybean contract settled 0.2% higher at RMB3,717 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday in volatile trade as players were torn between stronger soyoil and crude oil futures in after-hours trade and data indicating weakening local fundamentals, said trade participants.