December 18, 2008

 

CBOT Soy Outlook on Thursday: Firm on dollar, technicals, weather issues

 

 

Soybean futures on the Chicago Board of Trade are poised for a firmer start to Thursday's day session, buoyed by weakness in the U.S. dollar, supportive technicals and South American weather concerns.

 

CBOT soybean futures are called 6 cents to 8 cents higher.

 

In overnight electronic trading, January soybeans ended 5 3/4 cents higher at US$8.69 3/4. January soymeal was US$1.40 higher at US$264.60 per short tonne, while December soyoil ended 12 points higher at 31.12 cents per pound.

 

The influence of a weaker U.S. dollar opens the door for price strength in early action, with a positive technical outlook on charts and lingering concerns over dryness issues in Argentina and southern Brazil underpinning features, said Vic Lespinasse, analyst with Grainsanalyst.com.

 

A lower U.S. dollar makes U.S. exports more price competitive in world markets.

 

Technicals look favorable as the market continues to recover from recent contract lows, Lespinasse said.

 

Higher-than-expected weekly export sales are seen aiding the firmer tone. Upside momentum, however, is expected to remain limited due to traders' unwillingness to take on added risk in thin pre-holiday trading and lingering economic uncertainty.

 

A technical analyst said the next upside price objective for January soybeans is to push and close prices above psychological resistance at US$9 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$8 a bushel.

 

First resistance for March soybeans is seen at Wednesday's high of US$8.82 and then at US$8.90. First support is seen at Wednesday's low of US$8.55 1/2 and then at US$8.50.

 

U.S. Department of Agriculture reported total weekly soybean export sales were a net 900,300 metric tonnes for the week ended Dec. 11. Sales for 2008/09 were a net 893,600 metric tonnes. Analysts had forecast sales between 575,000 and 750,000 metric tonnes. The primary buyer was China with 823,100 metric tonnes. Soymeal sales were a net 62,600 tonnes, within trade estimates ranging from 50,000 to 75,000 tonnes. Soyoil commitments were a net 1,500 metric tonnes. Analysts had forecast sales between zero and 10,000 tonnes.

 

USDA also announced Thursday private export sales of 116,000 metric tonnes of U.S. soybeans for delivery to China in the 2008-09 marketing year.

 

The DTN Meteorlogix weather forecast said Argentina has a chance for scattered showers and cooler temperatures later this weekend and Monday.

 

In Brazil, Rio Grade Do Sul should be hotter and mostly dry until a cold front arrives next Monday or Tuesday. Stress to early growing soybeans will increase. The early indications suggest that showers associated with the front early next week will be only light.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Thursday, following crude oil prices. The benchmark May 2009 soybean contract settled RMB28 lower at RMB3,047 a metric tonne, or down 0.9%.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday on spillover pressure from slumping crude oil and a weakening U.S. dollar, but losses were limited amid short covering, said trade participants. The benchmark March contract on Bursa Malaysia Derivatives ended MYR35 lower at MYR1,545 a metric tonne.