August 16, 2007

 

CBOT Soy Outlook on Thursday: Down sharply; economic jitters, midwest rains

 

 

Soybean futures on the Chicago Board of Trade are poised for a sharply lower start to Thursday's day session, as a combination of global market liquidation and beneficial rains moving into dry areas of the soybean belt press prices, analysts said

 

CBOT soybean futures are called to start the session 15 to 20 cents lower.

 

In overnight e-CBOT trading, September soybeans were 20 cents lower at US$8.19, and November soybeans were 19 1/2 cents lower at US$8.35.

 

"Soybean futures have taken a downward path, with outside equity market problems pressing global markets, and an improved weather picture for U.S. crops sending defensive signals to traders," said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The increased chances of rains moving deeper into dry areas of the Midwest is marching soybeans to a good crop, and when you add in world economic jitters, and technical pressure, spec traders are poised to shed some length, a CBOT floor broker said.

 

The soybean market has turned soft technically also, with prices falling below key moving average support recently, said Roose.

 

Broad based commodity selling, with energy and metal futures down are expected to aid the defensive tone as well, traders added.

 

A technical analyst said bullish momentum has faded this week. The next upside price objective for November soybeans is pushing prices above solid technical resistance at this week's high of US$8.88. The next downside price objective is closing prices below solid support at US$8.50.

 

First resistance for November soybeans is seen at US$8.60 and then at Wednesday's high of US$8.67. First support is seen at Wednesday's low of US$8.51 1/2 and then at US$8.50.

 

The DTN Meteorlogix Weather Service forecast has increased the rainfall forecast for the U.S. Midwest region for the 6-10 day period. Some thundershower activity has been added to the southeast Midwest for the short range. The 6 to 10 day forecast for the U.S. Midwest calls for temperatures near to below normal west and north, near to above normal southeast. Rainfall is seen near to above normal.

 

Meanwhile, in the U.S. Delta dry and very hot conditions are on tap again Thursday. Not quite as hot during Friday and Saturday with the slight chance for a few light thundershowers developing. Highs should be above 100 Fahrenheit Thursday, 97-102F Friday and Saturday. Dry conditions with possibly a few afternoon thundershowers are seen for Sunday and Monday. Temperatures will average above normal but not as hot as it has been this week, Meteorlogix forecasts.

 

U.S. Department of Agriculture reported weekly soybean export sales were 313,300 metric tonnes for the week ended August 9. Included in the total were sales of 236,000 metric tonnes for the 2006-07 marketing year. The 2006-07 sales were primarily for China with 110,000 metric tonnes, and unknown destinations with 77,300 tonnes. Analysts had forecast old-crop soybean sales of 50,000 to 100,000 metric tonnes. New-crop sales were seen in a range of 200,000 to 400,000 metric tonnes. Soymeal sales were a net 192,700 tonnes, and soyoil commitments were 15,200 metric tonnes.

 

In other news, India kept the base import prices for soyoil and palm oils unchanged, a government statement said Thursday. The base import price for crude palm oil is unchanged at US$447 a metric tonne and the base import price for crude soyoil is unchanged at US$580/tonne.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended sharply lower Thursday on worries over carryover stocks, increased selling by funds and weakening equities markets, trade participants said. The benchmark November contract on Bursa Malaysia Derivatives shed MYR81 to end at MYR2,389/tonne, close to the day's low of MYR2,386/tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled lower Thursday, following falls at CBOT Wednesday, and beneficial rain in northeast China's major soybean and corn producing regions. The benchmark May 2008 soybean contract settled RMB43 lower at RMB3,566 a metric tonne.