July 17, 2008


CBOT Soy Outlook on Thursday: Down 4-6 cents; overnight theme; outside influence



Soybean futures on the Chicago Board of Trade are expected to start Thursday's day session on the defensive, taking their lead from overnight action, with weak outside markets and a lack of fresh support weighing on prices, analysts said.


CBOT soybean futures are called 4 to 6 cents lower.


In overnight electronic trading, August soybeans were 5 1/2 cents lower at US$15.67 1/2 and November soybeans were 5 1/4 cents lower at US$15.42 3/4. December soyoil was 1 point higher at 65.55 cents per pound while December soymeal was US$3.90 lower at US$405.80 per short tonne.


The combination of a firmer U.S. dollar, weakness in crude oil and metal futures is setting the stage for declines, said Vic Lespinasse, analyst with garinanalyst.com. The market got a lot of upside mileage out of long range hot, dry forecasts Wednesday, and futures are poised for a modest setback, he added.


The market needs a more reliable forecast to sink its teeth into than one that raises potential for a weather risk two-weeks away, Lespinasse said.


Meanwhile, lackluster weekly export sales data and news that the Argentine senate voted down an export tax proposal is seen aiding early weakness, traders said.


However, bullish underlying fundamentals remains a hindrance to any significant price declines, as the market remains very sensitive to any supportive influences that may arise during the day, analysts added.


A technical analyst said recent price action has formed a potentially bearish descending triangle pattern on the daily bar chart. However, follow-through buying interest on Thursday would likely negate that potentially bearish pattern.


The next upside price objective for November soybeans is to push and close prices above psychological resistance at US$16.00 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$15.00. First resistance for November soybeans is seen at Wednesday's high of US$15.59 1/2 and then at this week's high of US$15.83 1/2. First support is seen at US$15.30 and then at US$15.15.


Argentina's Senate dealt President Cristina Fernandez a stunning blow Thursday morning, rejecting a controversial grain export tax pushed by the Government. The Senate split evenly on the vote, but Vice President Julio Cobos surprised the chamber by indicating that he would vote against the tax. A four month conflict with farmers over the tax has led to numerous strikes and disruptive roadblocks.


The DTN Meteorlogix Weather forecasts said rainfall moving through the Midwest region during the next 3-5 days will provide favorable growing conditions for corn and soybeans well into next week.


The U.S. Department of Agriculture reported total weekly soybean export sales were a net 102,500 metric tonnes. 2007-08 crop year net sales totaled 63,500 tonnes for the week ended July 10. 2008-09 marketing year sales were 39,000 tonnes. The 2007-08 sales were primarily for China with 56,000 metric tonnes. Analysts had forecast sales between 175,000 and 500,000 metric tonnes.


Soymeal sales were a net 61,500 tonnes, near the low end of trade estimates of 50,000 to 200,000 tonnes. Soyoil commitments were a net 5,900 metric tonnes. Analysts had forecast sales between 5,000 to 60,000 tonnes.


In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Thursday, following Wednesday's rise at CBOT. The benchmark January 2009 soybean contract settled RMB76 higher at RMB4,977 a metric tonne, up 1.6% after trading between RMB4,964-RMB4,997/tonne.


Crude palm oil futures fell to a 10-week low Thursday as selling pressure swept through several commodity markets and investors rushed to take profits amid weak demand in the physical trade. The benchmark October contract on Bursa Malaysia Derivatives ended down MYR31 at MYR3,435 a metric tonne.

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