December 23, 2008
CBOT Soy Outlook on Tuesday: Up, follow overnight but crush bearish
Chicago Board of Trade soybean futures are expected to start Tuesday's day session modestly higher, taking their cue from overnight action amid a lack of a definitive outside influence.
CBOT soybean futures are called 2 cents to 4 cents higher.
In overnight electronic trading, January soybeans ended 2 cents higher at US$8.92 1/2. March soymeal was US$0.30 lower at US$274.60 per short tonne, while March soyoil ended 3 points lower at 31.22 cents per pound.
The absence of clear direction from outside markets will keep nearby contracts hovering around the US$9.00 level, with expectations of continued Chinese demand and perceptions of dryness problems in South America fundamentally supportive, said John Kleist, broker/analyst with Allendale Inc.
However, sluggish domestic demand, as evidenced by the November crush report, will limit upside momentum, Kleist added.
Traders said there is potential for two-sided action, as participants take a cautious approach in an effort to limit risk in thinning pre-holiday volume. Otherwise, the market will keep a close eye on technical factors, as it attempts to sustain price strength on its current recovery from contract lows.
A technical analyst said the next upside price objective for March soybeans is to push and close prices above psychological resistance at US$9.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$8.43 1/4 a bushel.
First resistance for March soybeans is seen at US$9.00 and then at US$9.08. First support is seen at US$8.75 and then at Monday's low of US$8.55 1/2.
U.S. soybean crushings totaled 144.6 million bushels in November, according to data released by the U.S. Census Bureau Tuesday. On average, analysts anticipated a 146.4-million-bushel crush, according to a Dow Jones Newswires survey. Crushings were down from 150.1 million bushels a month earlier and 155.7 million bushels a year earlier.
The report offered a bearish surprise for the crush and for domestic demand, noted analyst Vic Lespinasse, of grainanalyst.com.
Soymeal stocks for November totaled 599,326 short tonnes, compared to the average estimate of 343,000. Soyoil stocks totaled 2.562 billion pounds. Analysts, on average, expected 2.465 billion pounds.
The DTN Meteorlogix weather forecast said dry conditions with only a few light showers are on tap for Argentina during the next seven days. Temperatures will vary somewhat, cool at times and hotter at times. Rainfall is needed in some locations to help improve conditions for these crops, Meteorlogix said.
In Brazil, very hot temperatures, from 95 to 100 degrees Fahrenheit, were reported in Rio Grade do Sul again Monday. This region should slowly trend cooler during the next few days but limited to only light showers, Meteorlogix forecasts. Rain is needed to prevent significant stress from developing in the area.
India's state-run PEC Ltd sold 2,100 metric tonnes of imported soyoil to local refiner Ruchi Soya Industries (500368.BY) at US$872/tonne, a company official said Tuesday. PEC is authorized by the federal government to import vegetable oil for sale in the local market.
In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, tracking Monday's rise on CBOT. The benchmark May 2009 soybean contract settled RMB15 higher at RMB3,199 a metric tonne.
Crude palm oil futures on Malaysia's derivatives exchange fell as much as 3.65% Tuesday on profit-taking and spillover weakness from soybean oil and crude oil, said trade participants. The benchmark March contract on Bursa Malaysia Derivatives ended MYR58 lower at an intraday low of MYR1,530 a metric tonne.