March 20, 2009

 

CBOT Soy Outlook on Friday: Up on technical strength, inflation concerns

 

 

Chicago Board of Trade soybean futures are expected to climb 6 to 8 cents Friday on weakness in the dollar, technical momentum and continued turmoil in Argentina, analysts said.

 

In overnight trade, May soybeans were up 9 cents to US$9.49 1/2 per bushel and July soybeans were up 8 cents to US$9.48. May soyoil was up 31.83 points to 32.25 cents per pound and May soymeal was up US$2.80 to US$299.10 per short tonne.

 

The market's climb overnight came despite weaker outside markets and was due in part to technical buying, said Brian Hoops, president of Midwest Market Solutions. The May contract has climbed 51 cents from an intraday low Monday to Thursday's close. The rally was fueled Thursday by concerns about inflation due to the Federal Reserve's plan to buy U.S. Treasurys.

 

But farmer selling has helped limit the move, traders said. Hoops said farmers are likely to sell when cash prices get to US$9.

 

"We had a lot of farmer movement yesterday of grains, a lot of grains sales that kind of capped our rally and widened our basis levels back out," Hoops said.

 

A trader said farmer selling picks up when prices in the nearby futures contract get in the US$9.40 to US$9.50 range.

 

The trade continues to monitor farmer unrest in Argentina. Traders said the dispute over export taxes doesn't seem to be nearing a resolution, which supports the market.

 

Bulls have gained upside near-term technical momentum, as prices are in a steep three-week-old uptrend on the daily bar chart, a technical analyst said.

 

The next upside price objective is to push and close May prices back above solid technical resistance at US$9.80 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$9 a bushel.

 

First resistance for May soybeans is seen at Thursday's high of US$9.52 3/4 and then at US$9.60. First support is seen at Thursday's low of US$9.28 1/4 and then at US$9.20.

 

In international markets, crude palm oil futures on Malaysia's derivatives exchange rose 3.9% Friday, erasing all losses made during the week, on tight availability in the cash market, weakness in the U.S. dollar and strong gains in both soyoil and crude oil, trade participants said.

 

Soybean futures traded on the Dalian Commodity Exchange settled slightly higher Friday, supported by a big jump in soybeans on the Chicago Board of Trade overnight on dollar weakness and a rise in crude-oil prices.

 

In other news, India's soyoil imports may double in the current marketing year to October to around 1.5 million metric tonnes, rising from an earlier estimate of 900,000 tonnes due to the government's decision to scrap a 20% import duty on crude soyoil, London-based vegetable-oils analyst Dorab Mistry said late Thursday.

 

The government said Thursday that the import duty on soyoil has been scrapped, but so far it has issued no official notice.