April 4, 2008

 

CBOT Soy Outlook on Friday: Up 8-12 cents; recovery bounce continues

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session higher, continuing their recovery from recent lows on consolidative buying as the market refocuses on underlying fundamentals.

 

CBOT soybean futures are called to start the session 8 to 12 cents higher.

 

In overnight electronic trading, May soybeans were 13 1/4 cents higher at US$12.70 1/4, July soybeans were 11 cents higher at US$12.87. May soyoil was 3 points higher at 55.40 cents per pound and May soymeal was US$4.00 higher US$337.20 per short tonne.

 

The hard slide in prices earlier in the week opened the door for the bounce in prices as bargain hunting and speculative short covering buoys prices, analysts said.

 

The market is rebalancing fundamental factors, with a driving force in the market the need for new crop futures to gain on corn in an effort to sustain acreage increases, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

Traders and analysts are also questioning if the 2007-08 balance sheet will see a significant increase in ending stocks as a result of Monday's larger-than-expected quarterly stocks figure, as strong underlying demand continues to draw down old crop inventories, Roose added.

 

Meanwhile, firmer crude oil futures and a weaker U.S. dollar index is seen providing mild support as well, analysts added.

 

A technical analyst said prices are still in a five-week-old downtrend on the daily bar chart but market bulls have regained some fresh technical momentum and a bullish weekly high close on Friday would provide better near-term technical momentum. The next upside price objective for the July soybeans is to push prices above psychological and trend-line technical resistance at US$13.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$12.22.

 

First resistance for July soybeans is seen at Thursday's high of US$12.77 and then at US$13.00. First support is seen at Thursday's low of US$12.50 and then at US$12.22.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended slightly higher Friday but below crucial resistance of MYR3,300 a metric tonne for the fourth successive day, as projections of record-high palm oil inventories damped buying interest, said trade participants. The benchmark June contract on the Bursa Malaysia Derivatives ended MYR7 higher at MYR3,297/tonne after moving in a narrow range between MYR3,262 and MYR3,305 in lackluster trading.

 

Soybean futures traded on the Dalian Commodity Exchange were closed Friday for the tomb-sweeping holiday.

 

In other news, India's recent tax incentives for soymeal exports will likely significantly boost shipments of soy meal, which is already the country's largest exported oilmeal, a senior industry executive said Friday. Last week, the federal government extended a scheme to provide 5% reimbursement to soy meal and soy product exporters in the form of adjustment in import duties.