November 20, 2008
CBOT Soy Outlook on Thursday: Seen lower; bearish outside infleunces
Bearish outside market influences are expected to pressure Chicago Board of Trade soybean futures to a lower start Thursday.
CBOT soybean futures are called 15 to 20 cents lower.
In overnight electronic trading, January soybeans ended 18 1/2 cents lower at US$8.78 1/2. January soymeal were US$5.80 lower at US$263.80 per short tonne, while December soyoil shed 77 points to 31.58 cents per pound.
The market has some supportive underlying fundamental features, but the turmoil in outside financial markets is expected to override those features, said Vic Lespinasse, analyst with Grainsanalyst.com.
Traders are seen taking a cautious approach to activity, with stock indexes down at their lowest levels in 5 years, and crude oil down over US$3.00 a barrel.
The outsides are expected to keep buyers on the sidelines, with traders unwilling to take on added risk. Technical chart pressure is seen adding to the defensive tone, with pre-placed sell stops activated as futures challenge underlying support levels.
However, solid weekly export sales and firm cash basis levels remain supportive features, but the potential for rain to move into dry South American crop areas may temper that support, analysts added.
A technical analyst said the next upside price objective for January soybeans is to push and close prices above solid technical resistance at last week's high of US$9.54 1/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$8.72 3/4.
First resistance for January soybeans is seen at Wednesday's high of US$9.21 1/4 and then at US$9.35. First support is seen at this week's low of US$8.85 and then at US$8.72 3/4.
U.S. Department of Agriculture reported total weekly soybean export sales were a net 790,900 metric tonnes for the week ended November 13, up 65 percent from the prior week. Analysts had forecast sales between 450,000 and 800,000 metric tonnes. The primary buyers were China with 469,200 metric tonnes and Mexico with 122,000 tonnes. Soymeal sales were a net 92,300 tonnes, within trade estimates ranging from 75,000 to 130,000 tonnes. Soyoil commitments were a net 7,900 metric tonnes. Analysts had forecast sales between zero and 10,000 tonnes.
The DTN Meteorlogix weather forecast added some rain to the forecast for major corn/soybean areas of Argentina during the period Tuesday-Wednesday of next week. This is to be viewed with caution, since it is a significant change from yesterday's forecast. In either case it does not look to be the start of a more regular rainfall pattern as dry weather returns behind it.
In Brazil, mainly dry weather is seen for the next 5-7 days from Mato Grosso Do Sul to Rio Range Do Sul along with a warming trend. Long range charts suggest some pick up in rain chances but this is somewhat uncertain, Meteorlogix added.
In other news, China plans to purchase more of its domestic soybeans from northeast producing regions to protect farmers' interests, an official at a government think tank said Thursday. The official, who declined to be named, said the amount to be purchased, which follows a commitment last month to buy 1.5 million metric tonnes, is not finalized yet, but analysts say it could be 1 million tonnes.
In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Thursday on speculation that the government may buy another 1 million tonnes of the commodity for its reserves, aimed at soaking up surplus and supporting prices. The benchmark May 2009 soybean contract settled 0.2%higher at RMB3,289 a metric tonne.
Crude palm oil futures on Malaysia's derivatives exchange fell as much as 3.5% Thursday on a fall in crude oil but closed off lows amid higher exports. The benchmark February contract on Bursa Malaysia Derivatives ended MYR12 lower at MYR1,468 a metric tonne.