April 15, 2008

 

CBOT Soy Outlook on Tuesday: Up 10-15 cents, technical momentum, outside support

 

 

Soybean futures on the Chicago Board of Trade are expected to start Tuesday's day session on firm footing, continuing its recovery from early April lows on technical momentum and fresh outside market support.

 

CBOT soybean futures are called to start the session 10 to 15 cents higher.

 

In overnight electronic trading, May soybeans were 14 1/2 cents higher at US$13.87, July soybeans were 14 1/2 cents higher at US$14.03 3/4. May soyoil was 74 points higher at 62.24 cents per pound and May soymeal was US$2.40 higher US$352.60 per short tonne.

 

Technical buying is seen buoying prices, as participants target overhead resistance levels in the absence of fresh bearish news to weigh on prices, analysts said.

 

Speculative buying is fueling an upside push as fresh money continues to flow into commodities in general amid the weakness in the U.S. dollar, analysts added.

 

A weaker U.S. dollar makes U.S. commodities more attractive in world markets.

 

Outside inflationary markets are lending support as well, with a record high jump in crude oil futures above US$113.00 a barrel and rising metal futures feeding the bullish psychology, a CBOT floor analysts said.

 

Meanwhile, futures have a bullish fundamental outlook, with tightening old crop supplies amid strong demand remaining an underpinning feature, analysts added.

 

However, traders will be on the lookout for signs of upside exhaustion, with wet Midwest conditions raising concerns that corn planting delays could lead to additional 2008 soybean acreage, a floor broker said.

 

A technical analyst said market bulls have regained solid upside technical momentum recently. The next upside price objective for July soybean is to push and close prices above psychological resistance at US$14.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$13.38 3/4, which would fill on the downside an upside price gap on the daily bar chart.

 

First resistance for July soybeans is seen at last week's high of US$13.96 1/2 and then at US$14.00. First support is seen at Monday's low of US$13.68 and then at US$13.50.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply higher Tuesday on record-high crude oil prices overnight and weakness in the U.S. dollar. The benchmark January 2009 soybean contract settled RMB120 higher at RMB4,186 a metric tonne.

 

In other news, China's soybean import growth in the 2008-09 crop year will likely slow down due to an increase in oilseeds output, think tank China National Grain and Oils Information Center said Tuesday.

 

China's soybean imports in the 2008-09 crop year starting October are expected to reach 35 million metric tonnes, up 2.9% from a year earlier, said Cao Zhi, an analyst at CNGOIC. The country's soybean imports in the 2007-08 crop year are seen rising 18.3% to 34 million tonnes, he said.

 

China's soybean oil imports in March totaled 220,000 metric tonnes, preliminary data provided by the General Administration of Customs showed Tuesday. Imports in the first quarter of this year rose 24% on year to 720,000 tonnes, it said, but didn't provide the percentage change for March.