October 30, 2008
CBOT Soy Outlook on Thursday: Modest gains seen on stronger outside markets
Soybean futures on the Chicago Board of Trade are expected to gain modestly as trading opens Thursday.
CBOT soybean futures are called 2-4 cents higher.
In overnight electronic trading, November soybeans added 2 1/2 cents to US$9.39 3/4 cents per bushel. January soybeans added 2 cents to US$9.49. December soybean meal remained flat at US$283 per short tonne, while December soybean oil was 15 points higher at 34.48 cents per pound.
Export shipments totaled 1.349 million metric tonnes for the week ending Oct. 30, according to a report released by the U.S. Department of Agriculture on Thursday.
"With strong export sales, all eyes will be watching the outside markets," a CBOT floor trader said. "Sales were tremendous, but that's old news."
Soybeans are finding support in a weaker U.S. dollar, strengthening equities and crude oil, and a technical rebound that is trying to gain momentum, he said.
"But the sustainability of [the rally] will be in question," he added.
Soybean bears will aim to close January soybeans below the psychological support level of US$9, a market technician said, pegging first support at US$9.25.
"Soybean bears remain in near-term technical command" even after short covering and bargain-hunting buying drove prices to close near their maximum trading limits, the analyst said. "However, the bulls did gain some fresh upside technical momentum Wednesday and follow-through buying on Thursday or Friday would be a bullish technical clue that a harvest low is in place."
The bulls must close above the US$10 psychological resistance level, he said, marking first resistance at this week's high of US$9.59 and then US$9.72 1/2 and then US$9.25.
Stocks of U.S. soyoil are down month over month and year over year, according to data released by the U.S. Census Bureau Thursday.
September soyoil stocks were pegged at 2.471 billion pounds, compared with 2.904 billion pounds a year, according to the Census Bureau's Fats and Oils stocks report.
The average analyst expectation was 2.416 billion pounds in a range of 2.378-2.435 billion pounds.
The Census Bureau pegged stocks at 2.551 billion pounds in August. Soyoil used for methyl ester, or biodiesel, fell about 18% from a month earlier to 247.2 million pounds.
Harvest weather should improve across the U.S. Midwest for the next week with temperatures ranging from 34-72 degrees Fahrenheit, according to DTN Meteorlogix.
The Midwest can expect mostly dry weather with a few light showers possible on Sunday and Monday, the private forecasting firm said.
In Brazil, warm to hot, dry weather is depleting soil moisture for planting and developing soybeans through northern Mato Grosso, while weather is "generally favorable" through Parana and "drier weather would benefit through Rio Grande do Sul," DTN said.
Meanwhile, in Argentina, "beneficial rains" should improve soil moisture conditions for crop planting, the forecaster added.
In global trading news, China's soybean futures traded on the Dalian Commodity Exchange settled higher Thursday, helped by gains in equities and crude oil.
The benchmark May 2009 soybean contract settled 90 yuan higher at RMB3,380/tonne, or 2.7%, and China's benchmark January 2009 soyoil contract traded limit up at RMB6,380. China may hike its soybean import tariff to as much as 9% from 3%, some traders there said, but finance ministry officials declined to comment.
Tumbling global soybean prices, due to the financial crisis and ample global harvest, left China's imported soybeans lower than domestic prices despite the government's efforts to protect farmers with higher government purchase prices.
Crude palm oil futures on Malaysia's derivatives exchange ended up Thursday on technical buying and support from soyoil and crude oil, erasing almost all the losses of the past week, said trade participants.
The benchmark January contract on the Bursa Malaysia Derivatives ended 125 ringgit higher at MYR1,560 a metric tonne, near the intraday high of MYR1,578/tonne.