February 8, 2008

 

CBOT Soy Outlook on Friday: Up 25-30 cents; overnight, follow through buys

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session sharply higher, with follow through buying from the overnight session featured following a U.S. Department of Agriculture report that failed to pack any surprises, analysts said.

 

CBOT soybean futures are called to start the session 25 to 30 cents higher.

 

In overnight e-CBOT trading, March soybeans were 29 cents higher at US$13.60 1/2, July soybeans were 27 3/4 cents higher at US$13.90, and November soybeans were 17 cents higher at US$12.98.

 

Spillover support from limit up wheat futures will once again influence prices, with people afraid spring wheat will compete with soybeans for acreage, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Technical buying will play a key role as well, with buyers encouraged by the market's ability to extend to new all-time highs as sellers are reluctant to challenge upside moves, analysts said.

 

Shrinking stocks in the USDA's soybean balance sheet is supportive also, as traders remain fearful of the potential for soybeans to follow a similar upward path that wheat is following, if a crop issue arises this year amid tight stocks, Roose added.

 

The USDA cut 2007-08 ending stocks by 15 million bushels to 160 million from the 175 million bushels forecast in January, and below the average analyst guess of 167 million bushels.

 

The USDA increased exports by 10 million bushels to 1.005 billion bushels and raised the crush by 5 million to 1.835 billion bushels.

 

The USDA left Brazil and Argentina's 2007-07 production estimates unchanged at 60.5 million and 47 million tonnes respectively. World ending stocks were cut 45.82 million tonnes, down from 46.24 million in January.

 

Nevertheless, the market remains respectful of the key technical reversal achieved this week and any signs of weakness at the highs could uncover pre-weekend profit taking, analysts said.

 

A technical analyst said there was no follow-through selling Thursday and a potentially bearish buying exhaustion tail on the daily bar chart was not confirmed. The next upside price objective for March soybeans is to push and close prices above solid resistance at the contract and all-time high of US$13.73 a bushel. The next downside price objective is pushing prices below psychological support at US$13.00.

 

First resistance for March soybeans is seen at Thursday's high of US$13.35 and then at US$13.41. First support is seen at Thursday's low of US$13.10 and then at US$13.00.

 

The DTN Meteorlogix Weather Service said another hot day is store for the southern soybean belt of Brazil. However, there appears to be a fairly heavy rain event moving in during the weekend and lingering early next week. If this is verified, it would most likely end any concerns for this part of the belt. Meanwhile, there is a chance that the north soybean belt would not be as wet during the coming days with some improvement to conditions possible, Meteorlogix reports.

 

In Argentina, the chance for widespread rains from a weather event appears to have diminished somewhat. This is especially the case for the southwest. However, cooler temperatures and at least some rain favors developing crops, Meteorlogix forecasts.

 

In overseas markets, soybean and corn futures traded on the Dalian Commodity Exchange will be closed Feb. 6-12. The exchange is closed for the Chinese New Year holiday. Asian crude palm oil futures are closed Feb. 7-8 for the Lunar New Year holiday as well.