April 10, 2008

 

CBOT Soy Outlook on Thursday: Up 20-30 cents, outside influences, solid demand

 

 

Soybean futures on the Chicago Board of Trade are poised to start Thursday's day session with strong gains, buoyed by supportive outside influences, underlying demand and lingering farm strike talk in Argentina.

 

CBOT soybean futures are called to start the session 20 to 30 cents higher.

 

In overnight electronic trading, May soybeans were 30 1/2 cents higher at US$13.43 1/2, July soybeans were 30 1/4 cents higher at US$13.60 1/4. May soyoil was 128 points higher at 59.35 cents per pound and May soymeal was US$6.50 higher US$356.10 per short tonne.

 

Follow through buying from Wednesday's sharp gains is expected to produce a higher theme, with price strength in energy and metal futures as well as weakness in the U.S. dollar attracting fresh money flow into commodities, analysts said.

 

Solid underlying demand, with good weekly export sales and concerns that Argentina farmers may resume a strike before a 30-day truce with the government ends and shift world importers to the U.S. is supporting prices as well, analysts added.

 

Meanwhile, technical activity will once again play a key role in price direction, with the ability of futures to eclipse overhead resistance levels allowing the power of speculative money flow to accelerate advances, a CBOT floor broker said.

 

A technical analyst said prices are still in a five-week-old downtrend on the daily bar chart, but a strong up day on Thursday would likely negate that downtrend. The next upside price objective for July soybeans is to push and close prices above solid technical resistance at the last reaction high of US$13.72 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$13.00.

 

First resistance for July soybeans is seen at Wednesday's high of US$13.38 3/4 and then at US$13.50. First support is seen at US$13.11 and then at US$13.00.

 

U.S. Department of Agriculture reported total weekly soybean export sales were 643,800 metric tonnes for the week ended April 3. The 2007-08 marketing year sales totaled 583,800 tonnes. The sales were primarily to China with 286,100 metric tonnes, and unknown destinations with 120,500 tonnes. Analysts had forecast sales between 200,000 and 600,000 metric tonnes.

 

Soymeal sales were a net 173,900 tonnes, at the high end of trade estimates that ranged from 75,000 to 175,000 tonnes. Soy oil commitments were 17,200 metric tonnes, within trade estimates of 10,000 to 30,000 tonnes.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Thursday on record high crude oil prices overnight as well as U.S. dollar weakness. The benchmark January 2009 soybean contract settled RMB74 higher, or 1.86%, at RMB4,047 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended up 3.9% at a 10-day high Thursday after end-month inventories in March were estimated to have eased from record highs and on speculation soybean growers in Argentina may resume a strike against the hike in export taxes, said trade participants. The benchmark June contract on the Bursa Malaysia Derivatives ended MYR130 higher at an intraday high of MYR3,455 a metric tonne.