February 11, 2010

 

CBOT Soy Outlook on Thursday: Higher; firm cash basis to buoy prices

 

 

Soybean futures at the Chicago Board of Trade are seen starting Thursday's day session higher, continuing the overnight theme on tightening cash basis levels.

 

CBOT soybeans are seen opening Monday's day session 6 cents to 8 cents higher.

 

Overnight, CBOT March soybeans rose 8 1/4 cents to US$9.45 3/4 a bushel, and May soybeans were 7 cents higher at US$9.54.

 

The market is garnering fundamental support from firmer cash basis levels, with futures attempting to attract farmer selling of cash supplies for export demand, analysts said.

 

The cold, snowy conditions and low prices have combined to slow grain movement. There is no shortage of soybean supplies, just a lack of spot market supplies, and that is lending near term support to prices, traders said.

 

Technical buying and short covering as the market continues its corrective bounce from oversold levels adds to the supportive tone. Higher crude oil and gold futures in early trade is seen helping buoy prices.

 

End users are forced to bid up prices to secure needed inventories. Soymeal futures are garnering support from firming cash basis levels as well.

 

However, the longer term theme remains lower, as the market prepares for the influx of record South American supplies to enter the world pipeline in coming weeks, analysts said.

 

A market technician said the next downside price objective for March soybeans is pushing and closing prices below major psychological support at March prices above solid technical resistance at US$9.50.

 

The DTN Meteorlogix weather forecast said major growing areas from Brazil's Mato Grosso to Rio Grande do Sul will see plenty of rain during the next 10 days--favoring soybean crop growth.

 

In Argentina, a sharp cold front will bring much cooler weather to the region and some thunderstorm activity later Friday and during Saturday. Still, the country has favorable growing conditions for the most part, Meteorlogix said.

 

The U.S. Department of Agriculture weekly export sales data normally released Thursday has been postponed because of the snowstorm that has closed the U.S. federal government this week. The USDA didn't say when the data will be released.

 

In overseas markets, Dalian Commodity Exchange soybean futures climbed Thursday, following a rebound on CBOT Wednesday. The September 2010 soybean contract settled up RMB28, or 0.7%, at RMB3,807 a metric tonne.

 

Bursa Malaysia Derivatives crude palm oil futures ended higher Thursday amid supportive cues from soyoil and crude oil futures. The April CPO contract on the Bursa Malaysia Derivatives ended MYR17 up at MYR2,580 a metric tonne.

 

Rotterdam soybean prices were higher while soymeal prices were steady to firmer. European vegoil prices were generally firmer.