July 19, 2007
CBOT Soy Outlook on Thursday: Down 10-12 cents; e-CBOT, overnight rains
Chicago Board of Trade soybean futures are seen starting Thursday's day session on the defensive, following the overnight theme, with beneficial overnight rains in the Midwest setting the stage for lower price action.
CBOT soybean futures are called to start the session 10 to 12 cents lower.
In overnight e-CBOT trading, August soybeans were 11 3/4 cents lower at US$8.39 1/2 per bushel, and November was 11 3/4 cents lower at US$8.64 3/4.
Favorable near-term weather is expected to apply early pressure to prices, with traders on guard for additional fund liquidation amid heavy speculative length in the market, analysts said.
Traders said there is potential for margin liquidation amid CBOT raising margins on soymeal effective Friday. However, supportive longer range outlooks, with forecasts for a return of heat and dryness next week in the Midwest seen limiting downside potential, traders added.
Analysts said recent rains should stabilize crop conditions in the eastern Midwest, but dryness and missed rain opportunities in parts of the western Midwest will leave crops in the northwestern Midwest at risk.
A technical analyst said serious near-term chart damage has been inflicted in soybeans recently to suggest a major market top is in place. The next upside price objective for November soybeans is closing prices above solid technical resistance at US$8.93. The next downside price objective is closing prices below solid support at this week's low of US$8.55 1/2.
First resistance for November soybeans is seen at US$8.80 and then at US$8.86. First support is seen at US$8.70 and then at Wednesday's low of US$8.63.
The DTN Meteorlogix Weather Service forecast said Minnesota continues to miss out on most of the more important shower systems. This region will continue to decline. Recent rainfall and cooler temperatures for the next several days will favor crops elsewhere in the western Midwest. However, the long range does bear watching. In the eastern Midwest, the driest areas of the eastern Midwest - Indian/Ohio - have received much needed rainfall this week. However, it is probably not enough to hold them for long, if the pattern turns drier again, Meteorlogix reports.
The Meteorlogix 6-10 day forecast for the Midwest calls for temperatures to average near to above normal. Rainfall is seen near to below normal, with near normal more likely in the far eastern and southern parts of the belt and below normal more likely through the northwest Midwest.
The U.S. Department of Agriculture reported weekly soybean export sales were 345,900 metric tonnes for the week ended July 12. Included in the total were sales of 181,000 metric tonnes for the 2006-07 marketing year. The 2006-07 sales were primarily for Japan with 102,800 metric tonnes, and Taiwan with 30,900 tonnes. 2007-08 sales were primarily to Mexico with 155,900 metric tonnes. Analysts had forecast sales between 75,000 and 300,000 metric tonnes. Soymeal sales were a net 144,500 tonnes, and soyoil commitments were 4,700 metric tonnes.
In other news, Egypt's state-owned Food Industries Holding Co. is tendering to buy 15,000-20,000 metric tonnes of soybean oil, on a cost and freight basis oil for shipment during the second half of August, traders said Thursday.
In overseas markets, crude palm oil futures on Bursa Malaysia Derivatives, Malaysia's derivatives exchange, ended lower Thursday, dragged down by talk of poor July exports amid rising production. The benchmark October contract ended at MYR2,485 a metric tonne, down MYR43 from Wednesday.
On Singapore's Joint Asian Derivatives Exchange, CPO futures were lower, with the November contract down US$4.25 at US$725.00/tonne at 1000 GMT.
Soybean futures traded on the Dalian Commodity Exchange settled lower Thursday on sluggish demand, but analysts say prices may rebound from their recent slump. The benchmark January 2008 soybean contract settled RMB11 lower at RMB3,298 a metric tonne.
