October 9, 2008


CBOT Soy Outlook on Thursday: Seen up; short covering, oversold



Soybean futures on the Chicago Board of Trade are seen starting Thursday's day session higher, continuing the overnight theme on short covering in an oversold market.


In overnight electronic trading, November soybeans were 24 1/2 cents higher at US$9.88 1/2. December soyoil was 86 points higher at 40.63 cents per pound and December soymeal was US$7.20 higher at US$276.00 per short tonne.


Oversold conditions, a lack of outside market pressure and tight cash supplies are expected to lend support to underpin futures in early action, analysts said.


The evening up of positions ahead of Friday's crop reports coupled with supportive weekly export sales are seen aiding the firm tone as well, traders said.


However, global economic uncertainty continues to promote volatile activity in outside financial markets, keeping traders taking a cautious approach as they eye movements in equity markets, a CBOT floor analyst said.


A market technician said the next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is pushing and closing prices below major psychological support at US$9.00.


First resistance for November soybeans is seen at Wednesday's high of US$9.89 and then at US$10.00. First support is seen at US$9.50 and then at US$9.25.


U.S. Department of Agriculture reported total weekly soybean export sales were a net 602,400 metric tonnes for the week ended Oct. 2. Analysts had forecast sales between 300,000 and 700,000 metric tonnes. The primary buyer was China with 168,800 tonnes.


Soymeal sales were a net 204,500 tonnes, above trade estimates ranging from 50,000 to 150,000 tonnes. Soyoil commitments were a net 8,000 metric tonnes. Analysts had forecast sales between zero and 10,000 tonnes.


The USDA is scheduled to release its October crop report Friday at 8:30 a.m. EDT (1230 GMT). The average of analysts' estimates in a Dow Jones Newswires survey projects a crop size of 2.920 billion bushels with a yield of 39.9 bushels per acre. The averages ranged from 2.847 billion to 3.001 billion bushels for production and 38.9 to 40.9 bushels an acre for yields. In September, USDA projected a crop size of 2.934 billion bushels using a yield of 40.0 bushels an acre.


The average of analysts' estimates projects ending stocks at 188 million bushels. The averages ranged from 137 million to 258 million bushels. In September, USDA projected the 2008-09 carryout at 135 million. In pit trades, speculative fund buying was estimated at 3,000 lots.


The DTN Meteorlogix weather forecast said drier weather through Saturday in the U.S. Midwest should help improve conditions for harvesting. Rain may return to the region Sunday and Monday, with the heaviest amounts in the western belt.


In deliveries, Oct. soymeal deliveries totaled 545 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was October 8.


Oct soyoil deliveries totaled 479 lots. Issuers were scattered among various commission houses, while the house account at ADM Investor Services was the primary stopper of 341 lots. The last trade date assigned was October 6.


In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled slightly lower Thursday despite local interest rate cuts and the globally coordinated central bank rate cuts overnight. The benchmark January 2009 soybean contract settled RMB12 lower at RMB3,487 a metric tonne.


Crude palm oil futures on Malaysia's derivatives exchange rose 6.5% Thursday on short-covering and expectations that exports, though lower, may be better than earlier projections, said trade participants. The benchmark December contract on Bursa Malaysia Derivatives ended MYR115 higher at an intraday high of MYR1,890/tonne.

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