August 7, 2008
CBOT Soy Outlook on Thursday: Up 10-19 cents, oversold, outside market support
Soybean futures at the Chicago Board of Trade are seen starting Thursday's day session firm, bouncing back from prior losses on oversold conditions and outside market support.
CBOT soybean futures are called 10 to 19 cents higher.
In overnight electronic trading, August soybeans were 10 cents higher at US$12.30 1/2 and November soybeans were 19 cents higher at US$12.41. December soyoil was 114 points higher at 53.74 cents per pound and December soymeal was US$4.20 higher at US$331.00 per short tonne.
"Futures are poised for a higher start, with markets more commodity friendly today, ideas prices have sank to an intermediate value going into a crop report, and the fact that world soy and vegoil markets did not follow the CBOT tumble overnight," said Don Roose, president U.S. Commodities in West Des Moines, Iowa.
In early action, crude oil is up more than US$2 a barrel, and gold and silver futures are higher.
Technically, the market is well overdue for a chart bounce. This should provide some stability to prices, but after Wednesday's steep declines on talk of fund liquidation, traders will be a little hesitant to aggressively push prices with the threat of further fund selling looming, floor brokers said.
Wednesday's open interest didn't confirm the heavy liquidation rumored in the market Wednesday and that could be a stabilizer for prices, Roose added.
Open interest in CBOT soybean futures declined by 2,281 contracts, according to preliminary volume and open interest data from CBOT.
Weather conditions for U.S. soybean crops remain a negative feature, but that is fully factored into prices and with the uncertainty of yields and output, futures have underlying support, a CBOT broker said.
A technical analyst said the next upside price objective for November soybeans is to push and close prices above psychological resistance at US$13.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at the May low of US$11.64 3/4.
First resistance for November soybeans is seen at US$12.50 and then at Wednesday's high of US$12.75 1/2. First support is seen at Wednesday's low of US$11.99 and then at US$11.64 3/4.
The DTN Meteorlogix weather forecast said near to below normal temperatures and near to above normal rainfall during the next 6-10 days will maintain favorable conditions for flowering and pod filling soybeans.
In the U.S. Delta, scattered light showers with temperatures not as hot Thursday. More light showers are on tap for next Tuesday, with temperatures averaging near to above normal during the next seven days.
The U.S. Department of Agriculture reported total weekly soybean export sales were a net 619,600 metric tonnes. Analysts had forecast sales between 300,000 and 650,000 metric tonnes. Net sales for the 2007-08 crop year totaled 374,400 tonnes for the week ended July 31. The 2007-08 sales were primarily for China with 156,000 metric tonnes. Sales for the 2008-09 marketing year were 245,200 tonnes, with the primary buyer China with 175,000 tonnes.
Soymeal sales were a net 135,100 tonnes, within trade estimates of 100,000 to 200,000 tonnes. Soyoil commitments were a net 3,600 metric tonnes. Analysts had forecast sales between 5,000 and 15,000 tonnes.
In deliveries, August soybean deliveries totaled 8 lots. A customer account ADM Investor Services was the issuer, and a customer account at MF Global Inc. was the stopper. The last trade date assigned was July 2.
In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled mostly lower Thursday, along with declines at CBOT Wednesday. The benchmark January 2009 soybean contract settled RMB7 lower at RMB4,081/tonne, or down 0.2%.
Crude palm oil futures on Malaysia's derivatives exchange ended 2% higher Thursday, recovering from lows of early trade on fresh buying and expectations inventories may have eased slightly by end-July, said trade participants. The benchmark October contract on the Bursa Malaysia Derivatives ended MYR55 higher at MYR2,845 a metric tonne.