August 28, 2008

 

CBOT Soy Outlook on Thursday: Down 10-15 cents; rain prospects weigh on prices

 

 

Soybean futures on the Chicago Board of Trade are expected to open Thursday's day session lower, in tune with the overnight theme, as crop-improving rain moving through parts of the Midwest weighs on prices.

 

CBOT soybean futures are called 10 to 15 cents lower.

 

In overnight electronic trading, September soybeans were 13 cents lower at US$13.35 and November soybeans were 16 cents lower at US$13.32. December soyoil was 68 points lower at 54.25 cents per pound and December soymeal was US$4.20 lower at US$360.80 per short tonne.

 

Better-than-expected precipitation and rain coverage in Iowa and northern Illinois as well as potential moisture from what is expected to become hurricane Gustav have traders taking some premium out of prices, a CBOT floor analyst said.

 

Weather remains the dominant fundamental feature in the market amid ideas timely rains and an extended growing season will lead to stronger yield potential, analysts added.

 

However, supportive outside influences from firmer crude oil prices and a weaker U.S. dollar are expected to limit downside potential. The market is poised for another choppy session, as traders avoid taking on added risk heading toward an extended holiday weekend, traders added.

 

Lower-than-expected weekly sales and monthly crush data were considered slightly bearish and evidence that high prices are possibly rationing demand, analysts said.

 

A technical analyst said the next upside price objective for November soybeans is to push and close prices above solid technical resistance at this week's high of US$13.74 1/2 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$13.00.

 

First resistance for November soybeans is seen at Wednesday's high of US$13.71 and then at US$13.74 1/2. First support is seen at Wednesday's low of US$13.27 1/2 and then at this week's low of US$13.08.

 

The DTN Meteorlogix weather forecast said rains through the western and north-central Midwest crop belt will help maintain or improve prospects for filling crops, especially for soybeans. Dryness continues of much concern to the east and south and this does not look to change near term. There is no significant cold weather expected for the Midwest region during the next 7 days. The long range outlook is more uncertain but Meteorlogix tends to lean towards only somewhat cooler conditions during the last part of the 10-day forecast, favoring the west.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 143,100 metric tonnes. Analysts had forecast sales between 50,000 and 400,000 metric tonnes. Net sales for the 2007-08 crop year resulted in a net sales reduction of 193,300 tonnes for the week ended Aug. 21. Sales for the 2008-09 marketing year were 336,400 tonnes, with the primary buyer China with 90,000 tonnes.

 

Soymeal sales were a net 75,900 tonnes, within trade estimates of 25,000 to 155,000 tonnes. Soyoil commitments were a net sales reduction of 19,000 metric tonnes. Analysts had forecast sales between zero and 15,000 tonnes. Sales for 2007-08 were a net sales reduction of 19,300 tonnes and new crop sales totaled 300 tonnes.

 

The U.S. Census Bureau pegged the July soybean crush at 139.1 million bushels, down from the June crush figure of 140.99 million bushels. In a survey of analysts, the average of estimates was 140.3 million bushels. July soymeal stocks were reported at 294,505 short tonnes, down from the 424,305 tonnes in June, and well below the average of estimates at 375,000. Soyoil stocks came in at 2.784 billion pounds, down from June stocks of 2.899 billion, and below the average estimate of 2.841 billion pounds.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Thursday, along with weakness in soymeal and soyoil prices. The benchmark January 2009 soybean contract settled down RMB59, or 1.4%, at RMB4,271 per metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 1.2% lower Thursday in choppy trade on spillover weakness from soyoil while exporters continued to offer discounts on high-seas cargoes, trade participants said. The benchmark November contract on Bursa Malaysia Derivatives ended MYR32 lower, at MYR2,470 a metric tonne.