September 27, 2007

 

CBOT Soy Outlook on Thursday: Up 8-10 cents; technical, fundamental strength

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's session on firm footing, buoyed by technical and fundamental strength, analysts said.

 

CBOT soybean futures are called to start the session 8 to 10 cents higher.

 

In overnight e-CBOT trading, November soybeans were 11 cents higher at US$10.01 3/4, and January soybeans were 10 cents higher at US$10.16 1/4.

 

Carryover momentum from overnight trade, with the most active November futures propelling over the key US$10.00 per bushel level is expected to keep speculative buyers enthused, analysts said.

 

The supportive influence of outside inflationary markets, with metals and crude oil higher and the U.S. dollar weaker is expected to lend some strength to prices as well, traders said. A general lack of selling is expected to aid the firm tone, with solid weekly export sales, a supportive crush figure and lingering concerns about dryness in northern Brazil helping the bullish cause as well, traders added.

 

However, the market is overbought after a nearly US$2.00 a bushel rally from the August low, seasonal pressures, and the end of the month and quarter on Friday, so a mild correction may be in store on any sign of upside exhaustion, analysts added.

 

A technical analyst said market bulls have solid upside technical momentum and gained more Wednesday. Soybean futures prices are still in a steep uptrend from the August low, with still no strong technical signs of a market top being in place. The next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is closing prices below support at this week's low of US$9.70 1/4.

 

First resistance for November soybeans is seen at Wednesday's high of US$9.92 and then at the contract high of US$9.96 1/2. First support is seen at Wednesday's low of US$9.77 1/2 and then at US$9.70 1/4.

 

The DTN Meteorlogix Weather Service forecast said dry weather and near to above normal temperatures continue in the northern Mato Grosso. Little change in the forecast is expected during the next 7-10 days. Long range guidance indicates scattered showers and thunderstorms could develop during the week of October 7. Any significant soybean planting cannot take place until the rains arrive.

 

The U.S. Department of Agriculture reported weekly soybean export sales were 745,600 metric tonnes for the week ended Sept. 20. The sales were primarily for China with 240,200 metric tonnes, and unknown destinations with 151,800 tonnes. Analysts had forecast sales between 500,000 and 800,000 metric tonnes. Soymeal sales were a net 24,500 tonnes, and soyoil commitments were 4,200 metric tonnes.

 

The Census Bureau reported soybean crushings in August totaled 146.2 million bushels. The figure was slightly above the average survey estimate of 145.2 million bushels. August's figure is down from July's 150.2 million but above last year's 142.0 million. Soyoil stocks slipped to 3.008 billion pounds from July's 3.205 billion. The average of survey estimates was 3.019 billion pounds. Soymeal stocks were reported at 234,685 short tonnes. The stock figure was down from July's 315,191 and below the average estimate of 287,500 tonnes.

 

USDA is scheduled to release its quarterly grain stocks report Friday at 8:30 a.m. EDT. The average of analyst's estimates surveyed by Dow Jones Newswires pegs U.S. soybean supplies as of September 1, at 552 million bushels. The estimates ranged from 543 million to 558 million bushels.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Thursday, as funds flowed into soybeans from soyoil. The benchmark May 2008 soybean contract settled RMB68 higher at RMB4,198 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday as traders and funds liquidated long positions or just kept to the sidelines amid reports that Indonesia has raised the base export price, market participants said. The benchmark December contract at the Bursa Malaysia Derivatives ended MYR7 lower at MYR2,605 a metric tonne.