March 14, 2008

 

CBOT Soy Outlook on Friday: Firmer start on follow-through buying

 

 

Chicago Board of Trade soybean futures are poised to start Friday's day session firmer amid follow-through buying and weakness in the U.S. dollar, analysts said.

 

CBOT soybeans are expected to open 8 to 11 cents per bushel higher. In overnight electronic trading, CBOT May soybeans rose 8 1/2 cents to US$14.11 1/4.

 

Carryover buying from the overnight session should offer early support, along with the softer greenback and bullishness about strong demand for U.S. soyoil and soymeal, said Joe Victor, vice president of marketing for Allendale. A weaker dollar is seen as bullish because it gives foreign importers more buying power.

 

Traders are waiting for private analytical firm Informa Economics to release prospective plantings estimates at about 11:30 a.m. EDT. The U.S. Department of Agriculture is set to release its official estimates March 31.

 

The National Oilseed Processors Association said 138.923 million bushels of soybeans were crushed in February, down 13.516 million bushels from January's crush level and slightly lower than the average analyst estimate of 140.3 million bushels. Pre-report estimates for the crush ranged from 137.7 million to 142.0 million bushels.

 

Although crush is down from a month ago, the NOPA report should be supportive to the market because it meets the pace needed to hit the USDA's crushing target, Victor said. Crushing needs to average at least 132 million bushels a month to reach the USDA's 2007-08 estimate of 1.835 billion bushels, he said.

 

NOPA said soyoil yield was 11.58 pounds per bushel, slightly above the 11.56 recorded in January. Soyoil stocks were 2.717 billion pounds, down from last month's 2.840 billion.

 

A sell-off overnight in palm oil could put pressure on CBOT soybeans, a trader said. Crude palm oil on Malaysia's derivatives exchange fell sharply Friday amid strong selling pressure on market concern that palm oil exports growth may have slowed in the last few days, said trade participants.

 

The next upside price objective for the soybean bulls is to push and close the July contract above solid technical resistance at US$14.69 1/2, which would fill on the upside a big downside price gap on the daily bar chart, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at this week's low of US$13.71, he said.

 

First resistance for July soybeans is seen at Thursday's high of US$14.44 and then at US$14.51. First support is seen at Thursday's low of US$14.15 and then at US$13.99.

 

Soybean prices in China's major producing regions were lower in the week to Friday on tumbling soyoil and soymeal prices. Trading volume was light although offer prices fell, as traders stayed on the sidelines expecting lower prices.

 

In South America, harvest conditions over Parana and Mato Grosso Do Sul in Brazil should improve during the coming days as the rains shift north and then weaken, DTN Meteorlogix said. There is some chance for harvest delays in Mato Grosso and Goias, the private weather firm said.