July 9, 2009

 

CBOT Soy Outlook on Thursday: Seen mixed; new-crop expected to rise

 

 

Chicago Board of Trade soybean futures are poised to start mixed Thursday, with the new-crop November contract seen rising on overnight gains and unwinding spreads, traders said.

 

November soybeans are called to open 10 to 13 cents per bushel higher after ending up 13 3/4 cents overnight at US$9.05 3/4. Nearby July soybeans are called to start mixed after closing down 2 1/4 cents overnight at US$10.81 3/4.

 

The new-crop is expected to start stronger as the market attempts to stabilize after recent selling, Country Hedging said in a market comment. Soybeans have come under "enormous pressure this week, with heavy fund liquidation being a noted factor in the trade," the firm said.

 

"The funds have liquidated most of their positions in the corn market, but they are still carrying large position in beans, especially in the old-crop beans," said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage. "That is why you have seen and continue to see unwinding of the old crop/new crop spreads. The trade is becoming more confident that we will have enough beans to make it until new crop is available."

 

A few traders are "holding out" to see whether there are any fireworks when the July contract goes off the board July 14, but "for the most part traders are liquidating old crop positions," Pfitzenmaier said. The new-crop is "just being moved by the unwinding of the spreads," he said.

 

Weather for U.S. soybeans continues to look favorable, floor traders said. However, weather can change quickly in the corn belt in the summertime, and the most important growing month for soybeans is August, a technical analyst said.

 

"The weather is very nearly perfect for growing corn, soybeans, spring wheat, sorghum et al, with moderate temperatures and reasonable sums of rain almost everywhere," said Dennis Gartman, publisher of the Gartman Letter.

 

There could be some positioning ahead of U.S. Department of Agriculture crop data due out at 8:30 a.m. EDT Friday, although the data isn't expected to be a major market mover for soybeans, an analyst said.

 

The USDA said weekly U.S. soybean export sales were 1.229 million tonnes, above trade expectations of 800,000 tonnes to 1.1 million. Soymeal export sales of 30,900 tonnes were below expectations of 75,000 tonnes to 250,000 tonnes, while soyoil sales of 37,800 tonnes were within expectations of 5,000 tonnes to 55,000 tonnes.

 

Outside markets look supportive, with crude oil rising and the dollar weakening, traders said.

 

The next upside price objective for bulls is to push and close November soybeans above solid technical resistance at US$9.43 1/2, the technical analyst said. The next downside price objective for the bears is pushing and closing the contract below solid technical support at US$8.50, he said.

 

First resistance for November soybeans is seen at US$9.00 and then at Wednesday's high of US$9.16 3/4, he said. First support is seen at Wednesday's low of US$8.81 1/4 and then at US$8.75, he said.