February 21, 2008

 

CBOT Soy Outlook on Thursday: Up 12-14 cents; fundamentals attract spec buys

 

 

Soybean futures on the Chicago Board of Trade are expected to open Thursday's day session on firm footing, continuing to carve out new highs as strong fundamentals attract speculative buyers

 

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

 

In overnight e-CBOT trading, March soybeans were 14 cents higher at US$14.11 3/4, May soybeans were 13 cents higher at US$14.30, July soybeans were 12 1/4 cents higher at US$14.43, and November soybeans were 15 1/4 cents higher at US$13.81 1/4.

 

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

 

Solid underlying demand strength, a need to buy 2008 acres, and supportive outside influences are combining to provide strength to keep buyers in control of price direction, analysts said.

 

Carryover technical momentum is seen aiding the higher tone, with the inability of futures to sustain weakness on price breaks providing encouragement to buyers while keeping sellers on the run, analysts added.

 

Meanwhile, new crop futures remain in a bullish uptrend as the market continues to battle for increased soybean acres, traders said. Soaring soyoil futures amid stout world vegoil demand serves as a catalyst to buoy prices as well, traders added.

 

Nevertheless, participants will keep a close eye on upside exhaustion, as profit taking pressure remains a feature as traders remain cautious buyers at historic highs, a CBOT trader added.

 

A technical analyst said there are still no early technical warning signals that a market top is close at hand. The next upside price objective for July soybeans is to push and close prices above solid resistance at US$14.50 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$14.00.

 

First resistance for July soybeans is seen at the contract high of US$14.39 and then at US$14.50. First support is seen at this week's low of US$14.14 1/2 and then at US$14.00.

 

U.S. soybean planted area is expected to reach 71 million acres in 2008, U.S. Department of Agriculture Chief Economist Joseph Glauber said Thursday at the annual Agricultural Outlook Forum. The 2008-09 acreage estimate is up from a year ago, when 63.7 million acres were seeded to soy, but unchanged from the USDA's baseline projection released on Feb. 12.

 

The DTN Meteorlogix Weather Service said there may be a drying trend for the Brazil's Rio Grande do Sul region in the next seven days, reducing soil moisture for filling soybeans. However, this isn't a strong ridge induced drier period, so it could change somewhat during the coming days. There is some risk for heavier rains during the coming days in northern soybean areas where they are still harvesting but this is at least a few days away, Meteorlogix reports.

 

In Argentina, periodic thundershower activity and only brief hot spells likely means mostly favorable conditions for filling crops, Meteorlogix said.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled at new highs Thursday on bullish expectations of tighter 2008-09 supply to be announced tonight at the U.S. Department of Agriculture's Outlook Forum. The benchmark September 2008 soybean contract settled RMB59 higher at RMB5,068 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange reached a new record high for the sixth successive trading day Thursday on strong demand in the cash market and a surge in soyoil prices, said trade participants. The benchmark May contract on the Bursa Malaysia Derivatives ended MYR78 higher at MYR3,702 a metric tonne.