August 21, 2008
CBOT Soy Outlook on Thursday: Seen stronger on outside influences
Soybean futures on the Chicago Board of Trade are called to open Thursday's day session higher as strength in palm oil, metals and energies and a slipping dollar add support.
CBOT soybean futures are called 9-12 cents higher, building on an overnight rally that continued gains made in Wednesday's trade.
In overnight electronic trading, September soybeans were 11 1/4 cents higher at US$13.05 and November soybeans rose 14 cents to US$13.14. December soyoil was 80 points higher at 54.65 cents per pound and December soymeal was US$0.60 cents lower at US$354.30 per short tonne.
Continued volatility - as has characterized the market for the past week - is expected, a CBOT floor trader said.
"The grain market is focusing upon the weather for the next several days, and expects to see good quality rains developing in the midwest," said financial advisor Dennis Gartman in his daily Gartman Letter.
Rain forecast to refresh central and eastern Corn Belt crops "have already been discounted by the market," Gartman said. If those rains fail to materialize as expected, "the grains will become inordinately strong," he added.
Export sales of soybeans totaled 276,400 metric tonnes for the week ended Aug. 14, according to a weekly report released Thursday by the U.S. Department Agriculture. The figure was inline with the low end of analyst expectations.
The report reflected 81,000 metric tonnes of old-crop sales were canceled for the week.
Soyoil sales totaled 5,600 metric tonnes and soymeal sales totaled 53,100 metric tonnes, both squaring with analyst estimates.
"November soybean prices Wednesday closed solidly higher and nearer the session high and closed at a fresh two-week high close," a market technician said.
The next upside price objective for the bean bulls is to push and close prices above solid technical resistance at the week's high of US$13.41 a bushel on the November contract, with first resistance at Wednesday's high of US$13.17, he said.
The bears must pierce and close below the US$12.50 per bushel level to penetrate solid technical support, with first support seen at Wednesday's trading low of US$12.75 1/2.
Scouts on the western leg of the 2008 Pro Farmer Midwest Crop Tour continue highlighting the soybean crop's wide variability.
Scouts in the south western and west central districts of Iowa said the average pod count dropped by 7.6% from a year earlier. Scouts in the northwestern district reported a 5.4% increase.
From the road it's hard to tell the crop has a moisture problem, but some fields were observed with cracks in the soil that went down 18 inches, the scout said.
"Most people don't know we have a moisture problem, because we don't have a temperature (heat) problem, but western Iowa soybeans will have trouble finishing without rain in the next week to 10-days," he added.
On the eastern leg of the tour, scouts noted that the condition of the soybeans plants had markedly improved as the groups moved from western Ohio and eastern Indiana through western Indiana and across Illinois.
The extent of the dry soils across the eastern Corn Belt surprised tour participants.
On Friday at 10 a.m. EDT, Pro Farmer will release its official crop estimate, based in part on the figures collected by tour participants.
Rain is spreading northward into southern Missouri, and warm, dry weather across the remainder of the Corn Belt is favoring summer crop development, but pockets of developing dryness - mainly in the northern and eastern Corn Belt-are becoming a concern with respect to corn and soybeans, said Brad Rippey, an agricultural meteorologist at the USDA.
Thundershowers are expected to move to the eastern edge of the region over the weekend along with near-to-above-normal temperatures, DTN Meteorlogix adds.
In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled up Thursday on continued rebound as soyoil prices in the spot market rose. However, analysts said the rebound may not last long as cash demand hasn't effectively picked up, indicated by thin trade in the cash market.
The benchmark January 2009 soybean contract settled RMB29 higher at RMB4,290/tonne, or 0.7%, after trading in a wide range of RMB4,251-RMB4,333/tonne.
Crude palm oil futures on Malaysia's derivatives exchange ended 2.4% higher at a one-week high Thursday as investors took leads from renewed buying interest in the cash market and rising soyoil prices.
The benchmark November contract on Bursa Malaysia Derivatives ended MYR62 higher, at MYR2,653 a metric tonne.
"Palm prices have been falling drastically in recent weeks, but soyoil prices have not fallen as much, so there is a lot of room for palm prices to rise," says an Indonesia-based CPO trader.