August 9, 2007

 

CBOT Soy Outlook on Thursday: Seen up on technicals, southern Midwest weather

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's session higher, in tune with overnight trade, as the market continues to feed off supportive technicals and concerns for southern Midwest crops.

 

CBOT soybean futures are called to start the session 2 to 3 cents higher.

 

In overnight e-CBOT trading, November soybeans were 2 cents higher at US$8.80.

 

The market is poised to extend Wednesday's firm tone, with technical follow through from the recent breakout of a sideways trading pattern expected to lend support to prices, analysts said. The market is also finding fundamental support from lingering worries over heat and dryness stressing soybean crops in the southern Midwest and Delta, analysts added.

 

Otherwise, pre-crop report positioning is expected to be a featured attraction, with supportive weekly export sales and underlying strength from the soy products aiding the market's price strength, traders said.

 

A technical analyst said market bulls have regained solid upside technical momentum this week. Prices Wednesday produced a bullish upside breakout from a sideways trading range on the daily bar chart. The next downside price objective for November soybeans is closing prices below solid support at US$8.50. The next upside price objective is pushing prices above solid technical and psychological resistance at US$9.00.

 

First resistance for November soybeans is seen at Wednesday's high of US$8.79 and then at US$8.90. First support is seen at Wednesday's low of US$8.67 and then at US$8.64.

 

U.S. Department of Agriculture reported weekly soybean export sales were 530,400 metric tonnes for the week ended August 2. Included in the total were sales of 377,100 metric tonnes for the 2007-08 marketing year. The 2007-08 sales were primarily for unknown destinations with 165,000 metric tonnes, and China with 120,000 tonnes. Analysts had forecast old-crop soybean sales of 100,000 to 200,000 metric tonnes. New-crop sales were seen in a range of 200,000 to 400,000 metric tonnes. Soymeal sales were a net 200,900 tonnes, and soyoil commitments were 30,800 metric tonnes.

 

USDA is scheduled to release its August crop production and supply and demand reports Friday 8:30 a.m. EDT. The average of analysts' estimates pegged 2007 soybean production at 2.653 billion bushels, up from the July figure of 2.625 billion. The average was from a range of 2.550 billion to 2.722 billion bushels. Ending stocks were pegged at 589 million bushels from a range of 575 million to 603 million.

 

The DTN Meteorlogix Weather Service forecast said rainfall will maintain favorable growing conditions for crops grown through the central areas of the western Midwest and northern areas of the eastern Midwest. The southern areas of the eastern Midwest should see increasing stress due to drier and hotter conditions. The northern areas of the western Midwest continue under stress due to season long dryness, however there is at least some chance for improving conditions in this area later in the period, Meteorlogix said.

 

August soybean deliveries totaled 796 lots. A customer account at Man Professional Clearing was the principal issuer of 305 lots and stopper of 219 lots. The last trade date assigned was August 8.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended moderately higher Thursday, boosted by higher soyoil futures and expectations of growth in exports in August. The benchmark October contract on Bursa Malaysia Derivatives ended at MYR2,535 a metric tonne, up MYR35 from Wednesday.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly higher Thursday, tracking Wednesday's CBOT rally. The most heavily traded May 2008 soybean contract settled RMB23 higher at RMB3,527 a metric tonne.