February 15, 2008

 

CBOT Soy Outlook no Friday: Up 12-14 cents; carryover buys, demand outlooks

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session higher, buoyed by follow through buying from Thursday's gains and bullish demand outlooks.

 

CBOT soybean futures are called to start the session 12 to 14 cents higher.

 

CBOT futures set new contract and all-time highs in overnight trade.

 

In overnight e-CBOT trading, March soybeans were 13 1/2 cents higher at US$13.81 1/2, July soybeans were 13 cents higher at US$14.07 3/4, and November soybeans were 13 1/2 cents higher at US$13.19.

 

The combination of bullish technical momentum and outlooks for continued strong international demand are expected to keep speculative buyers enthused, analysts said.

 

A weather-induced drop in rapeseed production in China is spurring thoughts of increased imports of soybeans and soyoil by China, a cash connected CBOT broker said.

 

Spillover support from a continuous rise in Minneapolis wheat futures and the need to keep soybean prices competitive with wheat to buy spring acres is seen aiding the higher tone as well, analysts added.

 

Lingering fears of harvest slow downs in northern Brazil is also seen as an underlying supportive feature, traders said.

 

However, heading into an extended holiday weekend, any sign of upside exhaustion could attract profit taking pressure to produce weakness and possibly a choppy tone, traders added.

 

CBOT markets will be closed Monday in observance of Presidents Day holiday.

 

A technical analyst said soybean bulls regained solid upside technical momentum on Thursday's run to new highs. The next upside price objective for July soybeans is to push and close prices above solid resistance at the contract high of US$14.05 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$13.60, which would fill on the downside Thursday's big upside price gap on the daily bar chart.

 

First resistance for July soybeans is seen at Thursday's high of US$13.95 1/2 and then at US$14.05. First support is seen at US$13.75 and then at Thursday's low of US$13.70.

 

The DTN Meteorlogix Weather Service said it still appears likely that rains will return to Brazil's southern soybean belt as soon as Tuesday night and Wednesday, favoring filling soybeans. Long range charts suggest a chance for heavy rains in the Parana/Mato Grosso do Sul region later next week. Should this develop it would likely impact the early harvest, Meteorlogix said.

 

In Argentina, a few thundershowers developed overnight. Cooler weather returns early next week along with more showers, Meteorlogix forecasts.

 

In other news, Brazilian agribusiness consulting group Agroconsult expects Brazil to harvest a record 2007-08 soybean crop of somewhere over 60 million metric tonnes, said the group's director Andre Pessoa on Friday. Brazil harvested about 58 million metric tonnes in 2006-07.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled at new highs Friday in tandem with Thursday's soybean futures gains at CBOT as well as on easing concerns about governmental price control measures. The benchmark September 2008 soybean contract settled RMB55 higher at 4,929 a metric tonne.

 

Cash soybean prices in China's major producing regions were slightly higher in the week ended Friday, as farmers weren't selling actively due to the week-long Chinese New Year holiday.

 

Crude palm oil futures on Malaysia's derivatives exchange ended at a new high for the second successive day Friday, in anticipation of upcoming demand from China, strong export numbers and spillover strength from soyoil, trade participants said. The new benchmark May contract on the Bursa Malaysia Derivatives ended MYR27 higher at MYR3,480 a metric tonne.