July 16, 2009

 

CBOT Soy Outlook on Thursday: Lower; technical weakness, lacks bullish news

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's day session on the defensive, pressured by technical weakness and a lack of fresh bullish news.

 

CBOT soybean futures are seen opening 15 cents to 20 cents lower.

 

CBOT soybean prices were lower overnight. August fell 25 1/2 cents a bushel to US$9.95 and November slid 15 cents to US$8.89 1/2. The market is poised to extend the lower overnight theme, succumbing to speculative sales, as buyers continue to take a cautious approach in the face of bearish momentum, with favorable crop conditions adding weight to prices, analysts said.

 

News that China will release some of its soybean reserves next week added a negative psychological factor to the market, with technical pressure from Wednesday's bearish outside, lower close on technical charts keeping buyers on edge, analysts said.

 

Choppy activity could emerge, as supportive export demand and tight old crop inventories remain underpinning features. Otherwise, traders will watch outside markets and technical factors for direction, a CBOT floor broker said.

 

A technical analyst said first resistance for November soybeans is seen at US$9.25 and then at Wednesday's high of US$9.38. First support is seen at US$9.00 and then at this week's low of US$8.92.

 

DTN Meteorologix said the current weather pattern in the Midwest is favorable for developing soybeans. Hot temperatures, if any, will be brief and mainly confined to west and south areas.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 684,700 metric tonnes for the week ended July 9. Sales for 2008-09 were a net 134,200 metric tonnes. China bought 111,200 tonnes of old crop beans, including 55,000 switched from unknown destinations. Sales for 2009-10 totaled 550,500 tonnes, with China the primary buyer of 525,000 tonnes. Analysts had forecast sales between 450,000 and 700,000 metric tonnes.

 

Soymeal sales were a net 66,900 tonnes. Trade estimates ranged from 75,000 to 200,000 tonnes. Soyoil commitments were 90,100 metric tonnes. Analysts had forecast sales between 20,000 and 80,000 tonnes.

 

The China National Grain and Oils Information Center's will sell 500,000 metric tonnes of soybeans and 2 million tonnes of corn next week, it said Thursday. However, Chinese source said they don't expect the auction to have much of an affect because of high prices.

 

In overseas markets, soybean futures on the Dalian Commodity Exchange dropped on word of the government sale. The most-active May 2010 contract settled RMB12 a metric tonne lower at RMB3,488/tonne.