December 3, 2009

 

CBOT Soy Outlook on Thursday: Seen up; follow overnight, outside support

 

 

Chicago Board of Trade soybean futures are expected to start Thursday's day session on firm footing, following the overnight theme as the market recovers from Wednesday's setback.

 

CBOT soybean futures are expected to start 7 cents to 10 cents higher. In overnight trade, January soybeans were 9 1/4 cents higher at US$10.43 1/4 and March soybeans were 9 cents higher at US$10.50.

 

Outside market influences such as a weaker U.S. dollar, higher crude oil and higher gold futures, are expected to attract speculative buying, analysts said.

 

Concerns that Wednesday's losses were technically overdone are expected to underpin prices as well. Underlying fundamental strength tied to good demand remains a supportive force in the market, a CBOT floor analyst said.

 

However, a lack of fresh bullish demand news, with weekly export sales at the low end of traders' expectations is expected to limit upside price movement. Nevertheless, traders will eye speculative fund involvement, as buying or selling from the investment sector could aggressively push prices in either direction.

 

A technical analyst said first resistance for January soybeans is seen at US$10.40 and then at US$10.50. First support is seen at US$10.29 1/4 and then at last week's low of US$10.21.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 730,200 metric tonnes for the week ended Nov. 26. The primary buyer was China with 312,300 tonnes. Analysts had forecast sales between 650,000 and 1,000,000 metric tonnes.

 

USDA reported 1,363,700 metric tonnes were shipped in the week ended Nov. 26, with China the primary destination for 723,600 tonnes.

 

Soymeal sales were a net 113,900 tonnes. Trade estimates ranged from 150,000 to 200,000 tonnes. Soyoil commitments were 19,000 metric tonnes. Analysts had forecast sales between 10,000 and 40,000 tonnes.

 

The U.S. Census Bureau Thursday revised its October soyoil stocks estimate to 2.723 billion pounds, down from its preliminary estimate of 2.727 billion pounds, according to the Census Bureau's Fats and Oils stocks report.

 

In overseas markets, soybean futures on the Dalian Commodity Exchange settled lower Thursday as traders took profits amid concern over possible tightening of money supply. The benchmark September 2010 soybean contract settled RMB28 a metric tonne lower at RMB3,988/tonne.

 

Meanwhile, China will stop payments to corn and soybean processors currently eligible for government subsidies if prices of the commodities rise above certain levels, according to a joint statement issued by several ministries, led by the Ministry of Finance.

 

Crude palm oil futures on Malaysia's derivative exchange ended lower for a second consecutive trading day on profit taking and pressure from a weak cash market, trade participants said. The benchmark February contract on the Bursa Malaysia Derivatives exchange ended MYR11 lower at MYR2,478 a metric tonne.