July 24, 2008

 

CBOT Soy Outlook on Thursday: Up 5-8 cents; overnight theme, consolidation

 

 

Soybean futures on the Chicago Board of Trade are poised for a higher start to Thursday's day session, taking their cue from overnight price action as the market consolidates recent losses.

 

CBOT soybean futures are called 5 to 8 cents higher.

 

In overnight electronic trading, August soybeans were 8 cents higher at US$14.02 1/4 and November soybeans were 6 cents higher at US$13.90. December soyoil was 30 points higher at 60.15 cents per pound and December soymeal was US$2.10 higher at US$363.70 per short tonne.

 

"Futures are oversold and that should uncover some short covering, as traders attempt to get a handle on the real fair value of world soybean prices, particularly after the break in prices during the past week or so," a CBOT floor broker said.

 

A higher tone in outside inflationary markets, larger-than-expected weekly export sales and a general sense that the market is overdue for a bounce is seen limiting selling pressure, traders added.

 

Nevertheless, favorable near-term weather outlooks and the unpredictability of outside market influences is seen keeping a lid on upside potential as well, analysts said.

 

A technical analyst said the next upside price objective for November soybeans is to push and close prices above psychological resistance at US$14.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$13.50.

 

First resistance for November soybeans is seen at US$14.00 and then at Wednesday's high of US$14.14 1/2. First support is seen at Wednesday's low of US$13.62 1/2 and then at US$13.50.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were a net 735,400 metric tonnes. Analysts had forecast sales between 200,000 and 500,000 metric tonnes. Net sales for the 2007-08 crop year totaled 183,000 tonnes for the week ended July 17. Sales for the 2008-09 marketing year were 552,400 tonnes. The 2008-09 sales were primarily for China with 410,000 metric tonnes.

 

Soymeal sales were a net 168,300 tonnes, near the high end of trade estimates of 75,000 to 180,000 tonnes. Soyoil commitments were a net 19,800 metric tonnes. Analysts had forecast sales between zero and 45,000 tonnes.

 

The DTN Meteorlogix weather forecast continues to point toward generally favorable weather for developing soybeans with no signs of any significant hot, dry weather or persistent heavy rains.

 

The U.S. Census Bureau pegged the June soybean crush at 140.9 million bushels, down from the May crush figure of 152.6 million bushels. In a survey of analysts, the average of estimates was 140.1 million bushels. June soymeal stocks were reported at 424,305 short tonnes, down from the 433,169 tonnes in May, but well above the average of estimates at 328,800. Soyoil stocks came in at 2.894 billion pounds, down from May stocks of 2.979 billion, and below the average estimate of 2.911 billion pounds.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled mostly lower Thursday after their counterparts on CBOT broke through the support of US$14.00 per bushel Wednesday. The benchmark January 2009 soybean contract settled RMB13 lower at RMB4,545 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 2.8% higher Thursday, breaking a six-day streak of closing lower as investors covered their shorts and took leads for an expected sharp rise in exports. The benchmark October contract on Bursa Malaysia Derivatives ended MYR86 higher at MYR3,113 a tonne.
   

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