October 15, 2009

 

CBOT Soy Outlook on Thursday: Down 15-20 cents on improved weather forecast

 

 

Chicago Board of Trade soybean futures are poised for a lower start to Thursday's day session, pressured by warmer, drier weather forecasts for the Midwest next week.

 

CBOT soybean futures are seen starting 15 to 20 cents lower. In overnight trade, Nov soybeans were 20 3/4 cents lower at US$9.73 1/4.

 

The forecast is more favorable for Midwest field work next week, opening the door for a modest correction from recent gains in the market, a CBOT floor analyst said.

 

The market is subject to a modest technical correction on assumptions the U.S. soybean harvest will gain momentum on potentially drier weather next week.

 

Profit taking on recent advances maybe featured amid early weakness in outside financial markets, particularly after Wednesday's poor performance in the face of a declining U.S. dollar, AgResource Co. said in a market note. November soybeans settled up 1 cent Wednesday, down 14 1/2 cents from its session high.

 

Additional pressure may emerge from reports of increased movement of cash supplies in the western Midwest which is helping refill the pipeline in the transition from old to new crop inventories, AgResource added in the note.

 

Nevertheless, downside movement may remain limited, as diverging weather models encourage traders to keep risk premium in the market.

 

A market technician said first resistance for November soybeans is seen at US$10.00 and then at this week's high of US$10.12 1/4. First support is seen at US$9.87 and then at US$9.80.

 

The DTN Meteorlogix weather forecast said Thursday's U.S. weather model is more progressive with a trough, suggesting conditions would not be nearly as wet in the Midwest and Delta regions as other models project during the 6-10 day period.

 

The U.S. Department of Agriculture's weekly export sales report will be released Friday at 8:30 am EDT. The report normally released on Thursday was delayed due to the Columbus Day holiday.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled slightly higher Thursday, tracking gains on CBOT Wednesday. The benchmark May 2010 soybean contract settled up RMB9at RMB3,701 a metric tonne.

 

China's October soybean imports will likely decline to 2.01 million metric tonnes, the lowest monthly imports in two years, according to the latest report by the Ministry of Commerce. The country imported 2.75 million tonnes of soybeans last month, down 33% from a year ago and was the lowest monthly volume so far this year.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday, tracking a decline in soyoil and weighed down by profit taking and long liquidation, traders said. The December contract on Bursa Malaysia Derivatives finished MYR50 lower at MYR2,110 a metric tonne.