February 15, 2007

 

CBOT Soy Outlook on Thursday: 3-4 cents higher on follow-through buying

 

 

Chicago Board of Trade soybean futures are expected to start Thursday's day session higher on follow-through buying from firmer overnight gains and with spillover support from neighboring grains markets, analysts said.

 

Soybean futures are called to open 3 to 4 cents per bushel higher.

 

In e-CBOT overnight trade, March soybeans rose 4 1/2 cents to US$7.55.

 

CBOT corn and wheat also were modestly higher overnight and should help provide some support to soybeans, analysts said.

 

"The beans continue to be lifted by a rising tide of corn, especially, and wheat, to a lesser degree," said Mike Zuzolo, analyst with Risk Management Commodities Inc. "If the corn and wheat want to continue higher, then the beans aren't going to fight it."

 

The U.S. Department of Agriculture's long-term "baseline" report, released Wednesday was "pretty friendly," Zuzolo added.

 

The report said ethanol will be the driving force behind years of rapid expansion in the U.S. corn crop, pushing production up to 12.065 billion bushels for the 2007-08 marketing year, with steady increases predicted over the next 10 years.

 

The U.S. will see the strongest growth in U.S. corn and corn-based ethanol production over the next four years, but output will continue to increase steadily until 2016, according to the projections.

 

Some pressure on soybeans could come from light technical selling as March soybeans closed lower Wednesday after setting a new contract high, a floor trader said.

 

But a technical analyst said soybean bulls still have upside technical momentum on their side amid recent fund buying interest.

 

The next major upside price objective for the bulls is to close prices above solid psychological resistance at US$8.00. The next downside price objective for the bears is closing prices below solid support at US$7.20.

 

First resistance for January soybeans is seen at Wednesday's contract high of US$7.57 1/2 and then at US$7.65. First support is seen at Wednesday's low of US$7.48 1/2 and then at US$7.45.

 

Strength in outside markets could lend some mild support, sources said.

 

There also continues to be some bullish uncertainty about Brazil's soybean crop, traders added.

 

Persistently wet conditions in northern areas of Brazil is causing an increase in soybean rust and some delays in the early crop harvest, according to DTN Meteorlogix.

 

Conditions in Argentina, meanwhile, will remain "generally favorable" for the developing soybean crop as near to below-normal temperatures and some shower activity moving through central regions, Meteorlogix said. More rain would help, the weather firm added.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mixed Thursday as traders were staying on the sidelines ahead of the long Lunar New Year holiday. Many traders squared their positions as the market will be closed next week for the holiday, which begins Feb. 18.

 

China's soybean futures frequently track those on the Chicago Board of Trade, and traders said they were concerned about possible price fluctuations on CBOT while China is shut.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Thursday, boosted by short covering ahead of a long weekend and positive technical indicators. The market, however, remained well within recent ranges amid continued uncertainty over the longer-term supply and demand outlook.

 

In other news, India has kept the base import prices of palm oil and crude soyoil at existing levels, a finance ministry official said Thursday.

 

Indonesia's PT Astra Agro Lestari said it sold 3,000 metric tonnes of crude palm oil and palm kernel oil offered at an auction Thursday.

 

The USDA said Wednesday that weekly export sales data normally released on Thursday will be delayed until Friday because of a winter storm in the Washington, D.C. area.