February 22, 2008

 

CBOT Soy Outlook on Friday: Up 2-4 cents; overnight theme, fundamentals

 

 

Chicago Board of Trade soybean futures are expected to start Friday's day session firmer, taking its cue from overnight price action, with bullish momentum continuing to underpin prices.

 

CBOT soybean futures are called to start the session 2 to 4 cents higher.

 

In overnight electronic trading, March soybeans were 3 1/2 cents higher at US$14.09 1/4, May soybeans were 2 1/4 cents higher at US$14.27, July soybeans were 1 1/2 cent higher at US$14.41, and November soybeans were 3 cents higher at US$13.81 1/2.

 

A quiet news front is keeping a supportive tone in the market, with neutral to friendly new crop balance sheet projections and solid underlying demand for soybeans and soyoil limiting seller participation, analysts said.

 

Firmer crude oil prices and weakness in the U.S. dollar is seen aiding the higher tone, but without any fresh news to extend the advances, any sign of upside exhaustion could generate pre-weekend profit taking, analysts 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 Thursday's contract high of US$14.41 1/2 and then at US$14.50. First support is seen at Thursday's low of US$14.22 1/2 and then at this week's low of US$14.14 1/2.

 

U.S. 2008-09 soy planted area is estimated at 71 million acres and production is seen at 2.950 billion bushels, according to the U.S. Department of Agriculture, which released its grains and oilseeds outlook Friday at its annual Agricultural Outlook Forum.

 

The USDA said soy yields this year are seen at 42.1 bushels per acre. The government said soybean crush would be around 1.86 billion bushels while exports are seen at 910 million bushels. Ending stocks for 2008-09 are seen at 169 million bushels.

 

USDA announced Friday, private exporters reported the sale of 110,000 metric tonnes of U.S. soybeans to China for delivery in the 2007-08 marketing year on its daily reporting system.

 

USDA reported total weekly soybean export sales were 630,600 metric tonnes for the week ended Feb. 14. The sales were primarily for China with 248,600 metric tonnes, and Mexico with 159,000 tonnes. Analysts had forecast sales between 450,000 and 1,000,000 metric tonnes.

 

Soymeal sales were a net 80,300 tonnes, below trade estimates of 100,000 to 150,000 tonnes. 2007-08 sales totaled 48,600 tonnes. Soyoil commitments were 27,000 metric tonnes, within trade estimates of 10,000 to 30,000 tonnes.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Friday, with the benchmark September 2008 contract hitting new highs on higher soyoil prices. The September 2008 soybean contract settled RMB6 higher at 5,074 a metric tonne.

 

Cash soybean prices in China's major producing regions were higher in the week ended Friday, as farmers were reluctant to sell in expectation of higher prices due to reduced supply.

 

Crude palm oil futures on Malaysia's derivatives exchange ended a tad lower Friday, but not before extending their record-setting streak to a seventh successive trading day Friday on some speculative buying and firm soyoil prices, said trade participants. The benchmark May contract on the Bursa Malaysia Derivatives ended MYR4 lower at MYR3,698 a metric tonne.