March 2, 2007

 

CBOT Soy Outlook on Friday: 5-6 cents lower on follow-through selling

 

 

Chicago Board of Trade soybean futures are expected to start Friday's day session lower on follow-through selling from the overnight trading session, analysts said.

 

May soybeans are called to open 5 to 6 cents lower per bushel.

 

In e-cbot trading, May soybeans declined 6 cents to US$7.56.

 

May soybean prices Thursday gapped lower on the daily bar chart and hit a fresh three-week low under pressure from fund long liquidation. Soybeans also will be down Friday if the funds come in and sell again, a market analyst said.

 

"The funds are in control right now," he said.

 

Weakness in crude oil, gold and silver futures also could put extra pressure on the soybean market, the market analyst added.

 

The next major upside price objective for the soybean bulls is to close May prices above solid resistance at the contract high of US$8.07 1/2, a technical analyst noted. The next downside price objective for the bears is closing prices below solid support at US$7.50.

 

First resistance is seen at US$7.70 and then at Thursday's high of US$7.74. First support is seen at Thursday's low of US$7.55 and then at US$7.50.

 

"Bulls do not want to see a weekly low close on Friday," the technical analyst said. "Bulls would regain fresh upside technical momentum by filling on the upside Thursday's and Tuesday's downside price gaps on the daily bar chart. That means pushing prices back to US$7.93 1/2."

 

The technical chart for soybeans still looks bearish, a CBOT floor analyst added.

 

In other news, the U.S. Department of Agriculture's outlook forum will continue Friday.

 

At the conference, the USDA said U.S. 2007-08 soy planted area is estimated at 70.5 million acres and production is seen at 2.88 billion bushels. The USDA also said soy yields this year are seen at 41.5 bushels per acre.

 

In its February baseline report, the USDA estimated 2007-08 planted area at 71 million acres and harvested acreage at 69.9 million. Production for the coming marketing year was estimated at 2.9 billion bushels, with yields seen at 41.5 bushels per acre.

 

In 2006-07, soy planted acreage was 75.6 million acres, with harvested area at 74.5 million. Production in that marketing year was 3.204 billion bushels and yield was 43.0 bushels an acre.

 

U.S. farmers are expected to plant more corn acres and fewer soybean acres this spring to take advantage of sharp demand for ethanol.

 

"Acreage contraction especially in the higher-yielding corn belt, is likely to put some downward pressure on yield gains," USDA said.

 

Soybean exports are seen at 1.125 billion bushels, a 2% rise from 2006-07. Although export business is seen up, the U.S. share of trade is seen declining as "rising soybean prices are providing foreign producers with attractive production incentives," USDA said.

 

Looking at international growing conditions, recent rainfall in Argentina will favor filling primary and second crop soybeans, DTN Meteorlogix reported.

 

In Brazil, there are no significant concerns for the mature crops and harvests in the north, despite a few isolated thundershowers in the Region, Meteorlogix said. Rain in the far south could still favor pod filling soybeans, the firm reported.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Friday, following the declines at CBOT.

 

Soybean prices in China's major soybean-producing regions, however, rose in the week to Friday amid light trading, supported by gains in soybean futures at CBOT a week ago, when Chinese markets were closed for the Lunar New Year holiday.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Friday, dragged down by steep declines in soyoil futures. Trading activity was slow as most participants were reluctant take positions in the absence of fresh supply and demand indicators, trader said.

 

In other news, Indonesia's PT Astra Agro Lestari (AALI.JK) said in a statement that it sold 2,000 metric tonnes of golden crude palm oil offered in an auction Friday. Indonesia's PT Perkebunan Nusantara sold 1,500 metric tonnes of crude palm oil.