November 29, 2007

 

CBOT Soy Outlook on Thursday: Seen up on crude oil, underlying demand

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's day session higher, feeding off the firm overnight theme, with higher crude oil futures lending support, analysts said.

 

CBOT soybean futures are called to start the session 6 to 8 cents higher.

 

In overnight e-CBOT trading, January soybeans were 8 1/2 cents higher at US$11.05 1/4 per bushel, and March soybeans were 9 1/2 cents higher at US$11.23.

 

The market is poised for a higher start, with strength in crude oil futures and solid underlying demand underpinning prices, a CBOT floor analyst said.

 

The market remains in an uptrend, and without any bearish news to derail the bullish theme, futures continue to find support after small bouts of profit taking setbacks in recent weeks, analysts added.

 

However, with crude oil futures pulling well off overnight highs, metal futures drifting lower, and a higher U.S. dollar index, the market may find some pressure after initial gains are absorbed, a trader said.

 

Weekly export sales and monthly crush data were in line with expectations, but lingering concerns over dryness in southern Brazil and Argentina are seen providing mild support, he added.

 

A technical analyst said January soybeans scored a bullish outside day up on the daily bar chart. Bean bulls still have the solid near term technical advantage, amid still no solid technical clues that a market top is close at hand, he said. The next upside price objective is to push and close prices above solid resistance at the contract high of US$11.09 1/2 a bushel. The next downside price objective is closing prices below strong support at US$10.80.

 

First resistance for January soybeans is seen at Wednesday's high of US$10.97 1/2 and then at US$11.00. First support is seen at Wednesday's low of US$10.81 and then at US$10.80.

 

The U.S. Department of Agriculture reported weekly soybean export sales were 1,117,800 metric tonnes for the week ended Nov. 22. Analysts had forecast sales between 900,000 and 1,300,000 metric tonnes. The sales were primarily for China with 561,200 metric tonnes, and Japan with 132,800 tonnes. Soymeal sales were a net 145,200 tonnes. Soyoil commitments were 31,900 metric tonnes. The sales were primarily to China with 20,000 tonnes.

 

The U.S. Census Bureau released its monthly soybean crush report, pegging the October crush at 163.512 million bushels, up from the September crush figure of 147.7 million bushels. In a survey of analysts by Dow Jones Newswires the average of estimates was 162.8 million bushels. October soymeal stocks were reported at 282,930 short tonnes, down from the 350,920 tonnes reported for September, as well as below the average of estimates at 333,800. Soyoil stocks came in at 3.028 billion pounds, up from September stocks of 2.909 billion, but just below the average of estimates at 3.030 billion pounds.

 

The DTN Meteorlogix Weather Service said in Brazil and Argentina a drier weather pattern is in store during the next five days. The impact of this drier pattern will be mostly noted in Argentina. Cordoba province, in particular, is in need of more widespread rainfall.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Thursday as the market raised its supply expectations for next year. The benchmark September 2008 soybean contract settled RMB45 lower at 4,335 a metric tonne.

 

Crude palm oil futures traded on Malaysia's derivatives exchange briefly reclaimed the MYR3,000 level Thursday, tracking gains in crude oil and soyoil, and higher palm oil export estimates for the month should continue to support prices Friday, traders said. The February contract on Bursa Malaysia Derivatives ended up MYR57 at MYR2,990/tonne.