January 4, 2008

 

CBOT Soy Outlook on Friday: Down 3-5 cents; profit taking after new highs

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's day session on the defensive, as traders look to take some profits after securing record highs recently.

 

CBOT soybean futures are called to start the session 3 to 5 cents lower.

 

In overnight e-CBOT trading, January soybeans were 5 1/4 cents lower at US$12.46 1/4 per bushel, March soybeans were 3 1/2 cents lower at US$12.64, and July soybeans were 3 cents lower at US$12.88 after setting a new all-time high of US$13.01 1/2 overnight.

 

A quiet news front is providing little fresh bullish incentives to extend the market's run to historic levels, opening the door for an end of the week consolidative setback, analysts said.

 

Early weakness in outside inflationary markets coupled with a firmer U.S. dollar is seen aiding the lower tone, analysts added. However, the market continues to maintain bullish longer term outlooks and without any fresh bearish inputs, downside potential is expected to remain limited, traders said.

 

New contract highs were scaled overnight, with the July futures briefly pushing above the US$13.00 per bushel level. However, a lack of follow through buying uncovered selling to reverse the gains in late overnight trade, a trader added.

 

A technical analyst said market bulls have the solid near term technical advantage, and gained more power Thursday, amid still no strong technical clues that a market top is close at hand. The next upside price objective for March soybeans is to push prices to US$13.00 a bushel, so that the long-sought-after beans in the teens maxim can be realized, he said. The next downside price objective is pushing prices below solid technical support at US$12.18, which would fill on the downside this week's upside price gap on the daily bar chart.

 

First resistance for March soybeans is seen at Thursday's contract high of US$12.68 1/2 and then at US$12.93. First support is seen at Thursday's low of US$12.45 3/4 and then at US$12.36.

 

U.S. Department of Agriculture reported weekly soybean export sales were 150,600 metric tonnes for the week ended Dec 27. 2007-08 marketing year sales totaled 140,500 metric tonnes. The sales were primarily for Egypt with 72,700 metric tonnes, and Portugal with 71,500 tonnes. Analysts had forecast sales between 300,000 and 500,000 metric tonnes. Soymeal sales were a net 49,100 tonnes, and soyoil commitments were 5,700 metric tonnes.

 

The DTN Meteorlogix Weather Service said it continues to be a very difficult forecast period for Argentina. Weather models continue to show a strong trough next week, but it has been delayed by at least 24 hours. This opens the door to some fairly hot weather ahead of this cold front. Rainfall potential with the cold front is tough to call but it should be at least moderate, Meteorlogix added.

 

In deliveries, January soybean deliveries totaled 516 lots. A customer account at Bank of America Securities LLC was an issuer of 445 lots, with stoppers scattered among various commission houses. The last trade date assigned was Dec. 28.

 

January soymeal deliveries totaled 1,370 lots. Customer accounts at Man Professional Clearing issued and stopped 839 and 860 lots respectively. The last trade date assigned was Jan. 3.

 

January soyoil deliveries totaled 2,743 lots. Customer accounts at Man Professional Clearing issued and stopped 1,862 and 974 lots respectively. The last trade date assigned was Jan. 3.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled at fresh highs Friday, in line with a record high set Thursday on CBOT. The benchmark September 2008 soybean contract settled RMB21 higher at RMB4,797 a metric tonne.

 

Meanwhile, cash soybean prices in China's major producing regions were higher in the week to Friday on limited supply.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Friday on profit-taking, despite localized flooding and rains in oil palm regions that could restrict output, trade participants said. The benchmark March contract on Bursa Malaysia Derivatives ended MYR15 lower at MYR3,120.