August 27, 2009

 

CBOT Soy Outlook on Thursday: Up with overnight; export sales, crop fears

 

 

Chicago Board of Trade soybean futures are poised to open Thursday's day session higher following the overnight theme, with supportive export sales and crop fears underpinning prices.

 

CBOT soybean futures are seen opening 5 cents to 10 cents higher.

 

Strong demand reflected in the weekly export sales report, and cool weekend temperatures forecast for the Midwest that raise fears of a possible frost emerging before October, serve as support to attract buyers, said Victor Lespinasse, analyst with Grainsanalyst.com.

 

The U.S. remains the favored origin for Chinese demand, and with the 2009 crop needing an extended growing season, the threat of cold weather will entice traders into keeping risk premium in the market, Lespinasse said.

 

Tight nearby inventories remain a concern as well, but beneficial moisture for developing crops and talk of fresh supplies coming up from southern areas is expected to limit upside potential.

 

The absence of a definitive influence from outside financial markets will keep attention of technical chart formations, with futures lacking follow through buying near its highs in recent sessions.

 

A market technician said first resistance for November soybeans is seen at Wednesday's high of US$10.07 1/2 and then at this week's high of US$10.16. First support is seen at Wednesday's low of US$9.88 1/2 and then at this week's low of US$9.83.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 2.054 million metric tonnes for the week ended Aug. 20. Sales for 2009-10 were a net 1.966 million metric tonnes. The primary buyer of new crop sales was China with 1.531 million tonnes. Analysts had forecast sales between 750,000 and 1.600 million metric tonnes.

 

Soymeal sales were a net 167,700 tonnes. Trade estimates ranged from 50,000 to 200,000 tonnes. Soyoil commitments were 3,100 metric tonnes. Analysts had forecast sales between 5,000 and 20,000 tonnes.

 

The T-Storm weather forecast said heavy rain will continue to blanket areas near the I-80 corridor from eastern Iowa through Ohio for the next 24 hours. Cool to unseasonably cool temperatures follows from Saturday through Tuesday, but a damaging frost remains very unlikely in the U.S., T-storm forecasts.

 

U.S. soybean crushings totaled 129.4 million bushels in July, according to data released by the U.S. Census Bureau Thursday. On average, analysts anticipated a 126.8 million-bushel crush, according to a Dow Jones Newswires survey. Despite the higher than expected crush, the data are still a reflection of slower processor activity due to limited soybean availability and poor margins, analysts said. Crushings were down from 140.1 million bushels a month earlier, and down from 139.3 million bushels a year earlier. Soymeal stocks for July totaled 349,543 short tonnes, compared with the average estimate of 364,000. Soyoil stocks totaled 3.338 billion pounds. Analysts, on average, expected 3.160 billion pounds.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Thursday, tracking declines in Chinese equities. The benchmark May 2010 soybean contract settled 20 yuan lower a metric tonne at RMB3,706/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday, tracking declines in regional stock markets while sluggish trade in the cash market kept prices in negative territory. The benchmark November CPO contract on the Bursa Malaysia Derivatives ended 11 ringgit lower at MYR2,346 a metric tonne.