February 23, 2007
CBOT Soy Outlook on Friday: Lower start on profit taking, overnight
Light profit-taking and follow-through selling from weaker trading overnight are expected to pressure Chicago Board of Trade soybean futures to a lower start Friday, traders said.
Soybean futures are called to open down 1 to 2 cents per bushel.
In e-cbot trading, May soybean ended 2 cents lower at US$7.98 1/2.
The decline came after May soybean prices Thursday hit fresh contract highs and then trimmed gains before the end of the day session. Carryover selling from the sloppy close may show itself early Friday, sources said.
The market also is due for some kind of correction after strong recent advances, although traders don't want to be short going into spring planting, a floor source added. Continued commodity fund buying may keep prices in positive territory, he said.
Further support could come from technical buying after May prices closed Thursday above major psychological resistance at US$8.00 a bushel, a technical analyst noted.
The next major upside price objective for the bean bulls is to close May prices above solid resistance at US$8.50, he said. The next downside price objective for the bears is closing prices below solid support at US$7.70.
First resistance is seen at Thursday's day session contract high of US$8.07 1/2 and then at US$8.10. First support is seen at US$7.90 and then at US$7.81.
Higher-than-expected weekly U.S. soybean export sales also should be friendly for prices, a source said. Continued demand from China, in particular, has helped soybean prices stay strong recently, he added.
The U.S. Department of Agriculture reported export sales for the week ended Feb. 15 were 675,300 metric tonnes, 81% above the week earlier and 12% over the prior 4-week average. China bought 250,300 tonnes, and Indonesia bought 129,000 tonnes, according to the USDA.
Analysts surveyed by Dow Jones Newswires had estimated sales would be 300,000 to 600,000 tonnes.
The USDA said soymeal export sales totaled 209,900 tonnes, while analysts' had predicted sales would be 75,000 to 150,000 tonnes. The weekly sales were 23% above the previous week and 68% over the prior 4-week average.
Soyoil sales were within trade expectations at 1,800 tonnes. Analysts had estimated sales would be zero to 10,000 tonnes.
Looking at the weather, periodic rains in Argentina will mainly favor crops during the next week or more, DTN Meteorlogix reported.
In Brazil, northern soybean areas may see increasing shower activity during next week, after the drier weekend, according to the weather firm. The wet conditions may lead to more harvest delays, although showers favor pod filling soybeans in the southern belt, Meteorlogix said.
In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Friday, boosted by late buying interest after a largely uneventful day as the ongoing Lunar New Year festival continued to sap trading interest, traders said. The bulk of the gains came in the last hour of trading amid speculative buying interest and short covering ahead of the weekend, a source noted.
China's Dalian Commodity Exchange is closed this week due to the Lunar New Year holiday.
In other news, Indonesia's PT Astra Agro Lestari said it sold 5,000 metric tonnes of crude palm oil, super crude palm oil and semi-golden crude palm oil offered at an auction Friday, while Indonesia's PT Perkebunan Nusantara said it sold 1,500 tonnes of crude palm oil.
In India, a panel of senior bureaucrats has recommended a cut in import duty of soy oil and palm oils to the finance ministry, a senior food ministry official said. The panel recommended a 10 percentage point import duty cut for soy oil from the current 45% and a five percentage point reduction in the import duties of crude and refined palm oils.
If accepted by the finance ministry, this will be the third round of import duty reductions on palm oils in less than seven months and the first for soy oil in several years.
