March 8, 2007

 

CBOT Soy Outlook on Thursday: 2-3 cents higher on carryover, short covering

 

 

Chicago Board of Trade soybean futures are expected to start Thursday's day session higher amid carryover buying and short-covering before the release of new government carryout estimates, traders and analysts said.

 

Soybean futures are called to open 2 to 3 cents higher per bushel.

 

In e-cbot action, May soybeans were 3 cents higher at US$7.60 1/4.

 

Soybeans also finished higher in Wednesday's day session, and follow-through buying should push prices higher in early trading, a floor trader said. Short covering is also expected to be a feature ahead of the release of the U.S. Department of Agriculture's March supply and demand report, due at 8:30 a.m. EST (1330 GMT) Friday, traders said.

 

The USDA is expected to lower its U.S. soybean ending stocks estimate in the report because of a strong export and crush pace, analysts said. A Dow Jones Newswires survey of 15 analysts showed the average estimate for U.S. soybean ending stocks was 589 million bushels, down slightly from the USDA's February estimate of 595 million bushels.

 

The report also could include larger estimates for South American soybean production based on favorable growing conditions and early reports of high yields, analysts said.

 

Soybean prices also could feel some support from gains in the CBOT corn market and outside markets, a floor broker added.

 

Weekly export sales news looked mostly neutral, although China's demand for soybeans seems to be holding up, he added. Sales of U.S. soybeans and soymeal were within analysts' estimates, while soyoil sales came in a bit above expectations.

 

The USDA reported soybean sales for the week ended March 1 were 566,000 metric tonnes, 36% above the week earlier and 3% over the prior four-week average. China was the top buyer with 235,100 tonnes, the USDA said.

 

Analysts surveyed by Dow Jones Newswires had predicted sales of 250,000 to 600,000 tonnes.

 

Soymeal sales were 66,100 tonnes, within analysts' estimates that sales would be 25,000 to 100,000 tonnes. Soyoil sales were 8,000 tonnes, above analysts' expectations of zero to 5,000 tonnes.

 

Looking at the soybeans technical chart, losses earlier this week did not cause serious technical damage, a technical analyst said. Still, "bulls have more work to do," he said.

 

Bulls would regain some fresh upside technical momentum by filling on the upside last week's downside price gaps on the daily bar chart, he said. That means pushing May prices back to US$7.93 1/2. The next downside price objective for the bears is closing prices below solid support at this week's low of US$7.39 1/2.

 

First resistance for May soybeans is seen at Thursday's high of 7.63 and then at US$7.70. First support is seen at US$7.50 and then at Thursday's low of US$7.46 1/2.

 

In international markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Thursday on overnight gains at the CBOT. Still, consolidation is likely to be the theme for some time, analysts said.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Thursday as the market rode on the strength of related commodities such as soyoil and crude oil.

 

Indonesia's PT Astra Agro Lestari (AALI.JK), meanwhile, said it failed to sell 4,500 metric tonnes of super crude palm oil offered in an auction Thursday.