March 5, 2010
CBOT Soy Outlook on Friday: Firm, Thursday's losses seen overdone
Chicago Board of Trade soybean futures are expected to start Friday's day session on firm footing, bouncing on the market's notion that Thursday's declines may have been overdone.
CBOT soybeans are seen opening 3 cents to 5 cents higher.
Overnight, CBOT March soybeans ended 6 cents higher at US$9.38 1/2 a bushel, and May soybeans were 3 cents higher at US$9.45.
Futures found price support overnight after tumbling Thursday, with traders evening some positions ahead of the weekend. The market is seen consolidating heading toward next week's U.S. Department of Agriculture supply and demand report and the release of resurveyed 2009 production.
Optimism about future Chinese demand is expected to provide a boost to commodity prices in general, with strong early gains in crude oil futures a positive psychological signal for the market, analysts said. The soy complex is linked to the energy market because more than 10% of all U.S. soybean oil is turned into biodiesel fuel.
However, a quiet news front opens the door for choppy activity, with traders eyeing movement in the U.S. dollar, as its been a key driver of prices recently, analysts said.
Meanwhile, the advancing South American soybean harvest and limited Chinese buying interest is expected to limit upside potential.
A technical analyst said first resistance for May soybeans is seen at US$9.50 and then at US$9.60. First support is seen at Thursday's low of US$9.37 1/4 and then at US$9.30.
In overseas markets, soybean futures on the Dalian Commodity Exchange settled slightly lower Friday, following a tumble on CBOT Thursday. The September soybean contract settled RMB39 lower at RMB3,822 a metric tonne.
Crude palm oil futures on Malaysia's derivatives exchange ended lower Friday as participants weighed palm's narrowing discount to rival soyoil, trade participants said. The May contract on the Bursa Malaysia Derivatives ended MYR4 lower at MYR2,670 a metric tonne.
