July 10, 2008

 

CBOT Soy Outlook on Thursday: Down 4-6 cents, overnight theme, pre-report evening

 

 

Soybean futures on the Chicago Board of Trade are seen starting Thursday's day session on weak footing, taking its cue from the overnight theme, with traders evening positions ahead of Friday's supply and demand reports.

 

CBOT soybean futures are called 4 to 6 cents lower.

 

In overnight electronic trading, July soybeans were 1 cent lower at US$15.77 and November soybeans were 4 cents lower at US$15.53. December soyoil was 5 points lower at 65.30 cents per pound and December soymeal was US$3.60 lower at US$410.90 per short tonne.

 

Consolidative trade is seen as the focus of the market heading into Friday's reports, with choppy price action seen amid the absence of any fresh fundamental news, analysts said.

 

Favorable near-term weather conditions for developing U.S. Midwest soybean crops and a firmer U.S. dollar is expected to aide the defensive tone, traders said.

 

However, the market maintains a bullish long term fundamental outlook, with expectations for a tighter soybean balance sheet in Friday's U.S. Department of Agriculture reports seen limiting declines and promoting two-sided action, traders added.

 

A technical analyst said market bulls still have the solid near-term technical advantage and regained power Wednesday. The next upside price objective for November soybeans is to push and close prices above solid resistance at US$15.66 3/4 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$15.00.

 

First resistance for November soybeans is seen at Wednesday's high of US$15.60 and then at US$15.66 3/4. First support is seen at Wednesday's low of US$15.29 and then at US$15.00.

 

The DTN Meteorlogix Weather forecasts said a favorable weather pattern remains intact for corn and soybeans in the Midwest region. Hot weather is possible but only for fairly short periods of time. Shower activity will periodically move into the area, sometimes locally heavy and sometimes only light.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 288,900 metric tonnes. 2007-08 crop year net sales totaled 66,400 tonnes for the week ended July 3. 2008-09 marketing year sales were 222,500 tonnes. The 2008-09 sales were primarily for China and Israel with 55,000 metric tonnes each. Analysts had forecast sales between 250,000 and 600,000 metric tonnes.

 

Soymeal sales were a net 62,900 tonnes, near the low end of trade estimates of 50,000 to 150,000 tonnes. Soyoil commitments were a net 44,100 metric tonnes, 2008-09 marketing year sales totaled 28,500 metric tonnes. Analysts had forecast sales between 5,000 to 15,000 tonnes.

 

USDA is scheduled to release its July supply and demand report Friday at 8:30 a.m. EDT. The average of analysts' estimates for 2007-08 ending stocks is 123 million bushels, down a hair from the USDA's June estimate of 125 million, according to a Dow Jones Newswires survey of 11 analysts. The average of analysts' estimates for 2008-09 soybean carryout is 139 million bushels, down from the USDA's June estimate of 175 million, according to a survey of 13 analysts. The range of analysts' estimates was 100 million to 175 million.

 

In other news, China imported 17.23 million metric tonnes of soybeans in the first half of this year, up 24.4% from a year earlier, according to preliminary data issued by the General Administration of Customs Thursday. That means the country imported 3.58 million tonnes of soybeans in the June, 42% more than a year ago.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled mostly lower Thursday, on worries of an increase in supplies. The benchmark January 2009 soybean contract settled RMB4 lower at RMB4,946 a metric tonne, or down 0.08%.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday on a continued slowdown in exports and a rise in inventory, said trade participants. The benchmark September contract on the Bursa Malaysia Derivatives ended MYR4 lower at MYR3,511 a metric tonne.