October 23, 2008


CBOT Soy Outlook on Thursday: Up 10-12 cents, oversold, fundamental support



Soybean futures on the Chicago Board of Trade are expected to start Thursday's day session higher, feeding off the overnight theme amid oversold conditions and supportive underlying fundamentals.


CBOT soybean futures are called 10-to-12 cents higher.


In overnight electronic trading, November soybeans were 11 3/4 cents higher at US$8.70 3/4, January soybeans were 12 cents higher US$8.76 3/4. December soyoil was 17 points higher at 33.47 cents per pound and December soymeal was US$1.70 higher at US$259.00 per short tonne.


The market is technically oversold, and throwing in solid export demand, weather concerns for unharvested soybean crops and firm cash basis amid a lack of farmer selling, the market is poised for a bounce, said Don Roose, president of U.S. Commodities.


The deflationary impact of outside markets remains a dominant driving force, but mixed signals in financial, energy and currency markets are failing to provide any clear external direction for prices in early action, traders added.


Global economic uncertainties continue to be a drag on prices, with a lower-than-expected monthly crush figure applying price pressure as well, Roose said.


A technical analyst said the next upside price objective for November soybeans is to push and close prices above major solid technical resistance at this week's high of US$9.55 1/2 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week's low of US$8.38 1/2.


First resistance for November soybeans is seen at US$8.88 and then at US$9.00. First support is seen at Wednesday's low of US$8.62 3/4 and then at US$8.38 1/2.


U.S. Department of Agriculture reported total weekly soybean export sales were a net 784,100 metric tonnes for the week ended Oct. 16. Analysts had forecast sales between 600,000 and 900,000 metric tonnes. The primary buyers were China with 358,000 metric tonnes and unknown destinations with 213,000 tonnes.


Soymeal sales were a net 263,600 tonnes, above trade estimates ranging from 125,000 to 200,000 tonnes. Soyoil commitments were a net 3,300 metric tonnes. Analysts had forecast sales between 5,000 and 15,000 tonnes.


The U.S. Census Bureau pegged the September soybean crush at 125.7 million bushels, down from the August crush figure of 128.7 million bushels. In a survey of analysts, the average of estimates was 127.1 million bushels. September soymeal stocks were reported at 293,929 short tonnes, down from the 415,343 tonnes in August, and below the average of estimates at 336,000 tonnes. Soyoil stocks came in at 2.528 billion pounds, down from August stocks of 2.546 billion, but above the average estimate of 2.416 billion pounds.


The DTN Meteorlogix weather forecast said wet and cool to cold conditions during the next three to five days will likely delay field work through the western Midwest region. It looks to be warmer and drier again later in the period. The rains will move into the eastern areas later Thursday, especially for Illinois.


In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply lower Thursday, tracking Wednesday's tumble in crude oil futures and external markets. The benchmark May 2009 soybean contract settled RMB133 lower at RMB3,127 a tonne.


Crude palm oil futures on Malaysia's derivatives exchange fell as much as 5.8% in volatile trade Thursday to a 27-month low on spillover weakness from financial and crude oil markets, said trade participants. The benchmark January contract on the Bursa Malaysia Derivatives ended MYR15 lower at MYR1,550 a metric tonne.