February 5, 2010

 

CBOT Soy Outlook on Friday: Seen higher; consolidating prior losses

 

 

Soybean futures at the Chicago Board of Trade are expected to have a firm tone to start Friday's day session, buoyed by consolidative buying following a month long tumble in prices.

 

CBOT soybean futures are called to open day session trading 1 cent to 3 cents higher.

 

In overnight trade, March soybeans were 3 cents or 0.33% higher at US$9.17, and May soybeans were 2 3/4 cents higher or 0.30% higher at US$9.27 1/2.

 

The market has seemingly reached levels that are providing some consolidation, with traders encouraged by the March contract's ability to bounce off key psychological chart support at the US$9.00 level Thursday, a CBOT floor analyst said.

 

Oversold market conditions are attracting short covering and bottom picking, allowing futures to shrug off bearish outside market influences.

 

Traders are expected to square some positions to end the week, with participants taking a cautious stance ahead of Tuesday's U.S. Department of Agriculture supply and demand reports. The market is generally anticipating a tighter U.S. soybean balance sheet, with smaller ending stock projections.

 

Nevertheless, futures remain in a month long technical downtrend, and without any overtly fresh bullish news, upside potential is expected to remain limited.

 

A technical analyst said the next downside price objective for March soybeans is pushing and closing prices below major psychological support at US$9.00. The next upside technical objective is pushing and closing March prices above solid technical resistance at US$9.40.

 

USDA is scheduled to release its February supply and demand report Tuesday at 8:30 a.m., EST. The average soybean ending stock estimate of the18 analysts surveyed in a Dow Jones Newswires survey is 219 million bushels. USDA projected the carryout at 245 million in January.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Friday due to expectations that USDA supply-and-demand reports next week will show a bullish decline in soybean stocks. The September 2010 soybean contract settled up RMB35, or 0.9%, at RMB3,777 a metric tonne.

 

Cash soybean prices in China's major producing areas were stable in the week ended Friday as many crushers have suspended production due to the coming Lunar New Year holiday.

 

Crude palm oil futures on Malaysia's derivatives exchange climbed Thursday for a third consecutive day to their highest levels in more than two weeks as investors continued to cover short positions in anticipation of a fall in output and inventories. The April CPO contract on the Bursa Malaysia Derivatives ended up MYR12, or 0.5%, at MYR2,510 a metric tonne.