November 5, 2009

 

CBOT Soy Outlook on Thursday: Down 4-6 cents; bearish weather, harvest activity

 

 

Soybean futures on the Chicago Board of Trade is seen starting Thursday's day session on the defensive, following the overnight theme on bearish weather and harvest activity.

 

CBOT soybean futures are seen starting 4 to 6 cents lower. In overnight trade, Nov soybeans were 6 cents lower at US$9.89 1/2, and Jan soybeans were 6 cents lower at US$9.93.

 

The weather across the central U.S. is allowing for active harvesting and without any fresh supportive news to attract speculative buying, futures are poised for a lower start, analysts said.

 

Bearish private soybean crop estimates for the U.S. and South America are aiding the weaker tone.

 

The combination of weather, speculative fund activity and outside markets are the dominant factors in the market, said Victor Lespinasse, analyst with Grainanalyst.com. "The weather is bearish, the funds failed to push the market Wednesday, and a slightly lower U.S. dollar index and crude oil futures in early trade is not enough to influence prices at this point," Lespinasse said.

 

However, "a definitive move in the outside markets could shift price action as we move closer to grain market open," he added.

 

Meanwhile, lingering uncertainty about field losses and quality issues for soybeans in southern areas remain underpinning features limiting downside risks.

 

A technical analyst said first resistance for January soybeans is seen at Wednesday's high of US$10.22 1/2 and then at US$10.29 1/4. First support is seen at Wednesday's low of US$9.95 1/4 and then at US$9.87 1/4.

 

The DTN Meteorlogix forecast said mainly dry and very warm weather will favor crop harvests in the U.S. Midwest for at least the next 5-7 days, or possibly longer.

 

In the Delta, drier, warmer weather will help improve conditions for harvesting summer crops through Sunday, but wet weather early next week will likely slow field work again, Meteorlogix said.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 524,900 metric tonnes for the week ended Oct. 29. The primary buyer was China with 290,800 tonnes. Analysts had forecast sales between 450,000 and 700,000 metric tonnes. Soymeal sales were a net 116,700 tonnes. Trade estimates ranged from 100,000 to 250,000 tonnes. Soyoil commitments were 6,900 metric tonnes. Analysts had forecast sales between 5,000 and 20,000 tonnes.

 

Commodity brokerage firm FCStone on Wednesday estimated U.S. soybean production at 3.379 billion bushels. The firm said it estimated the average soybean yield at 44.1 bushels. USDA in October projected a soybean crop of 3.25 billion bushels, with a yield of 42.4 bushels per acre. The USDA is slated to update its forecasts at 8:30 a.m. EST Tuesday.

 

In other news, the National Commodities Supply Corp., or Conab, on Thursday estimated Brazil's 2009-10 soy crop at between 62.5 million metric tonnes and 63.6 million metric tonnes. Conab's second crop estimate for the 2009-10 soy crop is in a range of between 9.5% and 11.4% above the 2008-09 crop of 57 million tonnes.

 

The agricultural survey group of Brazil's Census Bureau, the IBGE, on Thursday put the 2010 soy crop at 63.7 million metric tonnes. IBGE's new data is 11.6% above the 2008 crop.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Thursday, tracking Wednesday's fall on the CBOT. The benchmark September 2010 soybean contract settled RMB12 a metric tonne lower at RMB3,727/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday on fears of rising inventories and spillover weakness from crude oil and soyoil, said trade participants. The benchmark January contract on the Bursa Malaysia Derivatives ended MYR13 lower at MYR2,247 a metric tonne.