June 19, 2008

 

CBOT Soy Outlook on Thursday: Down; profit taking, lacks fresh support

 

 

Soybean futures at the Chicago Board of Trade are seen starting Thursday's day session lower, weighed down by profit-taking pressure and the absence of fresh bullish news to extend recent gains.

 

CBOT soybean futures are called to start the session 3 to 5 cents lower.

 

In overnight electronic trading, July soybeans were 4 cents lower at US$15.52 and November soybeans were 5 3/4 cents lower at US$15.37 1/4. July soyoil was 48 points lower at 64.98 cents per pound and July soymeal was US$1.80 lower at US$418.90 per short tonne.

 

The market has put a lot of premium into prices recently, but without fresh supportive news to stimulate buying at near-record highs, traders are expected to take a cautious approach to activity, a CBOT floor analyst said.

 

Weather forecasts calling for warmer and drier conditions in the Midwest are seen opening up opportunities for planting and replanting, and with outside inflationary markets providing a negative influence, the market in poised to follow the lower overnight theme, traders said.

 

With soybean prices near record highs, there is a temptation for farmers to seed beans if weather provides a window for late plantings, a trader added.

 

Otherwise, export sales were a not a thrill and there are ideas that Argentina will resolve their strike issues and shift demand from the U.S., said Jack Scoville, an analyst with Price Futures Group in Chicago.

 

Nevertheless, as long as the Argentine strike continues, downside pressure should remain limited, said Scoville. The market has put a lot of emotion into prices based off recent floods, however, and with weather stabilizing traders will be encouraged to liquidate some length in the market, Scoville added.

 

The DTN Meteorlogix weather forecast said significant shower activity, more than 0.25 inch, will be mostly confined to Nebraska and Missouri during the next 3-5 days. This allows fields to gradually dry out while rivers slowly recede. The next chance that more widespread thundershowers would develop appears to be next Tuesday.

 

A technical analyst said the next upside price objective for the bean bulls is to push and close prices above solid technical resistance at the contract high of US$15.95 3/4 a bushel. The next downside price objective for the bears is pushing and closing prices below solid psychological support at US$15.00.

 

First resistance for July soybeans is seen at Wednesday's high of US$15.73 1/4 and then at this week's high of US$15.88 1/2. First support is seen at Wednesday's low of US$15.39 1/4 and then at this week's low of US$15.23 1/2.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were 180,300 metric tonnes. Sales in the 2007-08 crop year totaled 171,200 tonnes for the week ended June 12. Analysts had forecast sales between 200,000 and 475,000 metric tonnes. The sales were primarily for China with 82,000 metric tonnes.

 

Soymeal sales were a net 122,400 tonnes, above trade estimates of 75,000 to 175,000 tonnes. Soyoil commitments were 900 metric tonnes, within trade estimates of zero to 10,000 tonnes.

 

Argentina farmers extended their strike until at least Friday night, leaders of the four top farm groups announced at a press conference Wednesday. Farmers will continue to prevent the sale of grain for export, Argentine Agrarian Federation President Eduardo Buzzi said.

 

China's soybean import may slow by nearly two-thirds in 2008-2009 crop year due to an increase in local oilseeds output, said a government think tank Thursday. China's soybean imports may rise 6% on year to 36 million metric tonnes in the crop year starting from Oct. 1, said an analyst with the think tank at a conference.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Thursday, following losses in Chicago Board of Trade soybean overnight. The benchmark Jan. 2009 soybean contract fell RMB52 lower to settle at RMB5,002 a metric tonne, after trading between RMB4,973/tonne and RMB5,034/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday as weak local fundamentals of rising stocks and slow demand continued to weigh, trade participants said. The benchmark September contract on the Bursa Malaysia Derivatives ended MYR40 lower at the support level of MYR3,600 a metric tonne.