January 18, 2008

 

CBOT Soy Outlook on Friday: Down 8-10, follow through, profit taking

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session on the defensive, pressured by follow-through selling from Friday's weak technical close.

 

CBOT soybean futures are called to start the session 8 to 10 cents lower.

 

In overnight e-CBOT trading, March soybeans were 9 1/2 cents lower at US$12.61 1/2, July soybeans were 9 1/2 cents lower at US$12.96, and November soybeans were 10 1/2 cents lower at US$12.59 1/2.

 

The markets inability to hold early gains Thursday coupled with overnight weakness in Malaysian palm oil and Chinese soybean futures set the stage for selling to reemerge, analysts said.

 

The market is looking a little toppy at this point and heading into an extended holiday weekend, profit taking looks to be a featured attraction, a CBOT floor broker said. However, volatile market activity is expected to continue, with two-sided action possible as bullish underlying fundamental outlooks remain supportive features, he added.

 

Meanwhile, forecasts for some weekend rain showers in Argentina will take some edge off prices, but traders say conditions still bear watching with heat and dryness seen returning next week, analysts added.

 

A technical analyst said the next downside price objective for March soybeans is pushing prices below solid technical support at this week's low of US$12.52. First resistance for March soybeans is seen at US$12.81 and then at US$12.86 1/2. First support is seen at Thursday's low of US$12.62 1/2 and then at US$12.52.

 

The DTN Meteorlogix Weather Service said a weak trough may lead to a few thundershowers in the driest areas of La Pampa and southwest Buenos Aires in Argentina early next week. However, this is not expected to change the situation significantly as the warmer/drier weather returns soon after.

 

In other news, Brazil's 2007-08 soy crop is 52% sold as of Jan. 15, farm consulting firm AgRural said Friday. The number is six points higher than the group's last estimate, made in late 2007.

 

Indian edible oil prices were up in the week ended Friday due to a sharp rise in global palm oil and soyoil markets, traders said. Expectations of a fall in local rapeseed production due to smaller planting areas also kept sentiment firm, they added.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Friday, after their counterparts on the CBOT fell Thursday. The benchmark September 2008 soybean contract settled RMB97 lower at 4,652 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange fell amid volatile trading Friday on forecasts that a downtrend in exports is likely to continue. The benchmark April contract on the Bursa Malaysia Derivatives ended MYR44 lower at MYR3,316 a metric tonne, after reaching an intraday low of MYR3,280/tonne.