July 3, 2008


CBOT Soy Outlook on Thursday: Down 8-12 cents; pre-holiday positioning



Chicago Board of Trade soybean futures are seen starting Thursday's day session on the defensive, taking their cue from the overnight theme, as traders square some positions ahead of the extended holiday weekend.


CBOT soybean and soy product futures and options will be closed Friday in observance of the Independence Day holiday.


CBOT soybean futures are called 8 to 12 cents lower.


In overnight electronic trading, July soybeans were 8 3/4 cents lower at US$16.37 and November soybeans were 17 cents lower at US$16.13. December soyoil was 28 points lower at 69.17 cents per pound and December soymeal was US$7.70 lower at US$419.80 per short tonne.


The market rallied overnight, with the July contract setting a new high of US$16.51, before profit taking surfaced to reverse price direction, analysts said.


"Futures are set to start lower, but with crude oil firmer, higher-than-expected weekly export sales and bullish underlying fundamentals, losses should remain limited, with two-sided action possible," said Vic Lespinasse, analyst with grainanalyst.com.


Meanwhile, weather uncertainties remain an underlying driver of prices, as tight projected ending stocks place increased pressure on 2008 yields and production just to offset a strong demand base seen carrying through the 2008-09 marketing year, traders said.


A market technician said all technical trends continue to point strongly to the upside, heading into the Fourth of July holiday. Traders should be aware that seasonally this period often serves up extra volatility in the grain futures markets. On the upside, the next key target for November soybeans is to push and close prices above solid technical resistance at US$16.50 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$16.00.


First resistance for November soybeans is seen at Wednesday's contract high of US$16.34 3/4 and then at US$16.50. First support is seen at US$16.11 and then at US$15.95 1/2.


The DTN Meteorlogix weather forecast said the 6- to 10 day outlook for the U.S. Midwest calls for temperatures near-to-above normal, with rainfall near-to-above normal.


The U.S. Department of Agriculture reported total weekly soybean export sales were a net 642,400 metric tonnes. 2007-08 crop year net sales totaled 465,900 tonnes for the week ended June 26. The sales were primarily for China with 200,600 metric tonnes. 2008-09 marketing year sales were 176,500 tonnes. Analysts had forecast sales between 325,000 and 525,000 metric tonnes.


Soymeal sales were a net 160,100 tonnes, above trade estimates of 25,000 to 125,000 tonnes. Soyoil commitments were 6,100 metric tonnes, within trade estimates of zero to 15,000 tonnes.


In deliveries, July soybean deliveries totaled 97 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was June 16.


In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply lower Thursday on concern over likely profit-taking on CBOT. The benchmark January 2009 soybean contract settled RMB95 lower at RMB5,110/tonne after trading between RMB4,980-RMB5,241/tonne.


Crude palm oil futures on Malaysia's derivatives exchange rose Thursday tracking strong soyoil futures Wednesday, and buying as participants squared off positions ahead of a holiday in the U.S., said trade participants. The benchmark September contract on the Bursa Malaysia Derivatives ended MYR19 up at MYR3,635 a metric tonne.

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