February 22, 2007

 

CBOT Soy Outlook on Thursday: Up 1-2 cents on overnight, technical strength

 

 

Follow-through buying from the overnight trading session and strong technical momentum are expected to push Chicago Board of Trade soybean futures to a higher start Thursday, analysts said.

 

Soybean futures are called to open 1 to 2 cents per bushel higher.

 

In e-cbot trading, March soybeans rose 2 1/4 cents to US$7.83 1/2, while May soybeans were up 1 1/2 cents at US$7.99 1/2.

 

Prices climbed overnight on carryover interest from a strong close to Wednesday's day session, floor sources said.

 

May soybeans Wednesday closed nearer the session high and hit another fresh contract high. Prices also pushed above major psychological resistance at US$8.00 a bushel, which gives extra encouragement to the bulls, a technical analyst noted.

 

"Bulls still have upside technical momentum on their side, and are looking for more in the near term," he said.

 

Funds have been active buyers in the market lately and their return would boost prices, a floor source said. Soybeans also will be looking toward CBOT corn and the outside energy markets for leadership, he added.

 

The next major upside price objective for the soybean bulls is to close May prices above solid resistance at US$8.50, the technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$7.70.

 

First resistance is seen at Wednesday's day session contract high of US$8.04 1/2 and then at US$8.10. First support is seen at US$7.90 and then at Wednesday's low of US$7.81.

 

There should be some underlying support from the U.S. Census Bureau's monthly soybean crush report, analysts said. U.S. soybean crush for January was 156.9 million bushels, slightly below the December crush of 157.1 million, according to the report.

The Census crush a year ago was 152.4 million, according to the report.

 

"This is a good, healthy crush," said Joe Victor, vice president of marketing at Allendale.

 

There is little other fresh fundamental news out to direct prices, although bullish concerns about the weather in the U.S. and South America persist, sources said.

 

Recently, the National Oceanic and Atmospheric Administration reported a La Nina, or a cooling of the water in the equatorial Pacific Ocean, had returned. The phenomenon can cause an excessively wet spring and a dry summer in the U.S. Midwest, analysts said.

 

Farther south, DTN Meteorlogix reported wet weather across northern Parana, Mato Grosso, and Goias in Brazil will disrupt early harvest and impact crop quality. However, conditions look to be drier, or at least less active, through Brazil's northern soybean areas during the next five days, the weather firm said.

 

In Argentina, periodic rains will mainly favor crops during the next week or more, according to Meteorlogix.

 

In overseas markets, China's Dalian Commodity Exchange is closed this week in celebration of the Lunar New Year holiday.

 

A "holiday mood" subdued trading interest in crude palm oil futures on the Bursa Malaysia Derivatives, traders said. Still, futures ended higher Thursday as the market continued to take its cue from soyoil, they said.

 

Indonesia's PT Astra Agro Lestari (AALI.JK) said it sold 4,250 metric tonnes of crude palm oil offered at an auction Thursday. Astra Agro noted 3,500 tonnes of super crude palm oil offered at the auction remained unsold.

 

Indonesia's PT Perkebunan Nusantara said it sold 2,000 metric tonnes of crude palm oil.

 

Egypt's Food Industries Holding Company said it bought 30,000 metric tonnes of food oil in a tender for delivery during the first half of April.