January 17, 2008

 

CBOT Soy Outlook on Thursday: Up 13-17 cents on demand, outside strength

 

 

Chicago Board of Trade soybean futures are expected to open Thursday's day session on firm footing, taking its cue from overnight trade, with supportive outside markets and solid weekly export sales buoying the market.

 

CBOT soybean futures are called to start the session 13 to 17 cents higher.

 

In overnight e-CBOT trading, March soybeans were 17 cents higher at US$12.94, July soybeans were 15 1/2 cents higher at US$13.29 3/4, and November soybeans were 13 cents higher at US$12.87.

 

The combination of higher-than-expected weekly export sales and strength in outside inflationary markets are laying the ground work for futures to continue the overnight session's bounce higher, analysts said.

 

Strong underlying global demand, weather issues for Argentina crops and talk of Wednesday's profit taking losses being overdone are seen attracting speculative buying, analysts added.

 

The overall theme of the market remains supportive, with tightening inventories, uncertain 2008 acreage amid stout demand keeping market bulls in command, a CBOT floor broker said. The trend in the market remains higher, with Wednesday's profit taking a brief pause until fresh supportive inputs such as export sales surface to keep buyers enthused, he added.

 

A technical analyst said Wednesday's gap lower on the daily bar chart, combined with last Friday's upside price gap, does form a bearish island top reversal pattern on the daily bar chart. That's an early technical warning signal of a market top. Also, Monday's price action appears to have produced a bearish buying exhaustion tail on the daily bar chart, he added.

 

The next downside price objective for March soybeans is pushing prices below solid technical support at Wednesday's low of US$12.52. First resistance for March soybeans is seen at Wednesday's high of US$12.81 and then at US$12.86 1/2, which is the top of Wednesday's downside price gap. First support is seen at US$12.70 1/2 and then at US$12.60.

 

U.S. Department of Agriculture reported weekly soybean export sales were 965,300 metric tonnes for the week ended Jan. 10. The sales were primarily for China with 263,800 metric tonnes, Japan with 184,200 tonnes, and Mexico with 155,900 tonnes. Analysts had forecast sales between 300,000 and 600,000 metric tonnes. Soymeal sales were a net 119,700 tonnes. Soyoil commitments were 35,800 metric tonnes.

 

The DTN Meteorlogix Weather Service said there is a chance for a few thundershowers in Argentina's Cordoba and Sante Fe Thursday night into Friday, but this chance looks less than it did Wednesday at this time.

 

In Brazil, rainfall has been taken out of the forecast for the Rio Grande do Sul region. This new forecast would mean that top soils would continue to trend drier, increasing stress to this part of the crop, Meteorlogix reports.

 

In other news, China's soybean imports are likely to continue growing in 2008, even as the government Wednesday imposed price controls on essential commodities including edible oils, Phillip Laney, the American Soybean Association's country director for China, said Thursday.

 

"More soybean imports would mean more supply of soy oil and soymeal, which will help keep prices of China's animal feed and edible oils lower. So I don't expect any restrictions on soybean imports," Laney said.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mixed Thursday, but they have little downside potential after recent weakness. The benchmark September 2008 soybean contract settled RMB1 higher at 4,749 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange bounced back sharply amid volatile trading Thursday, after two days of losses, mainly feeding off bullish spillover from soyoil and crude oil. The benchmark April contract on the BMD ended MYR97 higher at MYR3,360/tonne, close to the intraday high of MYR3,376/tonne.