January 25, 2008

 

CBOT Soy Outlook on Friday: Up 15-17 cents, follow-through recovery buying

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session on firm footing, bolstered by follow through buying from Thursday's recovery bounce, analysts said.

 

CBOT soybean futures are called to start the session 15 to 17 cents higher.

 

In overnight e-CBOT trading, March soybeans were 17 1/4 cents higher at US$12.47 3/4, July soybeans were 15 1/4 cents higher at US$12.79, and November soybeans were 16 1/2 cents higher at US$12.31 1/2.

 

The recovery in outside markets has taken some recessionary fears out of the marketplace, opening the door for futures to regain price strength amid its bullish longer range fundamental outlooks, analysts added.

 

Speculative buying is expected to keep a firm presence in early trade, as money flow continues to return in the absence of fresh fundamental news, traders said. Solid underlying technical support, with talk of the market's recent slide moving prices to areas of value as well as attracting fresh export demand are seen aiding the firm start, traders added.

 

Price strength in the neighboring soy products are expected to lend support also, as bullish underlying demand and favorable crush markets provide another supportive piece to the day's puzzle, a CBOT floor broker said.

 

A technical analyst said solid follow-through buying on Friday would provide market bulls with fresh upside near-term technical momentum and would repair recent near-term chart damage. The next downside price objective for March soybeans is pushing prices below solid technical support at this week's low of US$11.89 1/2.

 

First resistance for March soybeans is seen at US$12.40 and then at US$12.50. First support is seen at US$12.20 and then at US$12.09.

 

U.S. Department of Agriculture reported weekly soybean export sales were 687,300 metric tonnes for the week ended Jan. 17. 2007-08 marketing year sales totaled 663,000 tonnes. The sales were primarily for China with 204,300 metric tonnes, Mexico with 111,600 tonnes, and Japan with 74,400 tonnes. Analysts had forecast sales between 600,000 and 900,000 metric tonnes.

 

Soyoil commitments were 58,800 metric tonnes, above trade estimates of 10,000 to 20,000 tonnes. The sales were primarily to China with 30,000 tonnes. Soymeal sales were a net 163,000 tonnes, above trade estimates of 75,000 to 125,000 tonnes.

 

The DTN Meteorlogix Weather Service said scattered showers and cooler temperatures will help to ease stress to crops over the western growing belt of Argentina but more rain will be needed to end stress. Friday's outlook for next week is not quite as dry or as hot as it looked Thursday. However it still looks to be drier and warmer than normal. This means stress to crops will likely continue, Meteorlogix said.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Friday after their counterparts on CBOT ended sharply higher Thursday. The benchmark September 2008 soybean contract settled RMB97 higher at 4,628 a metric tonne.

 

Meanwhile, cash soybean prices in China's major producing regions were stable in the week ended Friday, and volumes were light as farmers were reluctant to sell.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Friday in volatile trading, with strong gains in soyoil prices more than offsetting weak exports, trade participants said. The benchmark April contract on the Bursa Malaysia Derivatives ended MYR44 higher at MYR3,255 a metric tonne.