December 17, 2009

 

CBOT Soy Outlook on Thursday: Down 7-10 cents on pressure from dollar rally

 

 

Chicago Board of Trade soy futures are expecting to open weaker Thursday following overnight losses as a strong dollar weighs on prices.

 

Soybeans are called 7 cents to 10 cents lower. In overnight trade, January soybeans were down 7 cents to US$10.52 1/2 per bushel and March soybeans were down 7 1/4 cents to US$10.59 3/4.

 

January soyoil was down 34 points to 39.99 cents per pound and January soymeal was down US$3.30 to US$313.60 per short tonne.

 

After a late surge pushed soybeans and grains markets higher late Wednesday, the market relinquished those gains in overnight trade thanks to the dollar, which climbed to a three-month high.

 

"That's the whole ballgame, I think," a floor analyst said.

 

The stronger dollar is prompting some broader concern that if it continues into next year, commodity prices could continue to struggle.

 

"Traders who sold dollars to buy commodities are reversing direction after last week's chart breakout by the currency, which is gaining on the euro after downbeat data from Europe and more positive news here in the U.S.," Farm Futures analyst Arlan Suderman said in a morning commentary.

 

Continued strong demand could limit the market's downside Thursday, traders said.

 

The U.S. Department of Agriculture reported weekly net soybean sales of 934,700 metric tonnes, at the high end of expectations, which were between 650,000 and 1 million tonnes. Sales were 920,100 tonnes the prior week.

 

The USDA reported net soymeal exports of 184,400 metric tonnes, down from 304,200 tonnes the prior week. Trade estimates ranged from 125,000 to 250,000 tonnes.

 

Soyoil exports totaled 20,700 tonnes, up from the prior week and at the high end of expectations between 5,000 and 25,000.

 

The next upside technical objective for the bulls is pushing closing January prices above solid technical resistance at the December high of US$10.78 1/2 a bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at the December low of US$10.19 a bushel.

 

First resistance for January soybeans is seen at Wednesday's high of US$10.69 3/4 and then at US$10.78 1/2, the technical analyst said. First support is seen at Wednesday's low of US$10.51 1/2 and then at US$10.40.

 

In other markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Thursday on the heels of a rise on the Chicago Board of Trade overnight, but the increase was capped by a sudden selloff following the dollar's rebound in Asian trading.

 

Crude palm oil futures on Malaysia's derivatives exchange Thursday rose as much as 1.6% to a six-month high following speculative buying and short covering, trade participants said.