February 26, 2010

 

CBOT Soy Outlook on Friday: Seen higher, outside markets lend support

 

 

Supportive outside market influences are expected to lead Chicago Board of Trade soybean futures to modest gains to start Friday's day session.

 

CBOT soybeans are seen opening 1 cent to 2 cents higher.

 

Overnight, CBOT March soybeans ended 1/2 cent lower at US$9.41 a bushel, and May soybeans were 3/4 cent higher at US$9.50 3/4.

 

A weaker U.S. dollar index and firmer crude oil futures are lending strength to prices in the absence of fresh fundamental news, analysts said.

 

The market is poised to retrace a portion of Thursday's declines, with end-of-the-week and month position evening expected as features. Underlying support is seen from traders factoring in some risk premium, as market focus begins to shift to the uncertainties of the 2010 planting season, analysts said.

 

News of fresh export sales to China will provide some underlying strength.

 

However, upside potential remains limited in the midst of a record South American harvest and potential competition for exports from Latin America.

 

Meanwhile, the nearby March future is expected to receive some price pressure from deliveries at the high end of expectations against the contract on first-notice-day. The deliveries are not expected to change the theme of the market, but adjust nearby spreads.

 

A technical analyst said the next downside price objective for May soybeans is pushing and closing prices below solid technical support at last week's low of US$9.41. The next upside technical objective is pushing and closing May prices above solid technical resistance at this week's high of US$9.85.

 

The U.S. Department of Agriculture announced Friday private export sales of 113,000 metric tonnnes of soybeans for delivery to China in the 2010-11 marketing year.

 

In deliveries, March soybean deliveries totaled 430 lots. A customer account at UBS Securities issued all 430 lots. The primary stopper was customer accounts at MF Global. The last trade date assigned was January 12. Analysts expect deliveries against the CBOT March soybean contract to fall in a range of zero to 500 lots, with most analysts leaning toward zero to 200 lots.

 

In other news, China's Ministry of Commerce has cut its February soybean imports forecast by 18% to 3.32 million metric tonnnes, according to data issued late Thursday. Its previous forecast was 4.05 million tonnnes for this month. Last February, China imported 3.26 million tonnnes.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Friday, following losses on CBOT Thursday. The September 2010 soybean contract settled down RMB16, or 0.4%, at RMB3,833 a metric tonnne.

 

Rotterdam soybean prices were mixed while soymeal prices were steady to lower. European vegoil prices were lower.