April 16, 2009

 

CBOT Soy Outlook on Thursday: Seen continuing uptrend on fundamentals

 

 

Soybean futures on the Chicago Board of Trade is seen continuing their six week long uptrend on bullish underlying fundamentals.

 

CBOT soybean futures are called to open 4 cents to 6 cents higher.

 

Chinese demand and South American production problems are seen as supportive catalysts.

 

Much of the reason for the rally for U.S. old crop soybean futures is the combination of declining 2009 Argentina soybean production as well as the country's political problems and stronger-than-average soybean purchases by China of US soybeans, according to an Allendale Inc. market note.

 

New crop futures are buoyed by the need for a strong increase in 2009 production to offset tight supplies carrying over from the 2008-09 marketing year.

 

With outside market influences neutral, traders expect fundamentals to keep prices underpinned, but choppy activity is a possibility as recent longs look for opportunities to book profits on rallies, a CBOT floor analyst said.

 

Technical activity will be featured as well, with traders eyeing nearby contract's ability to challenge resistance at late January highs between US$10.45 and US$10.48, said Vic Lespinasse, analyst with Grainsanalysts.com.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above solid technical resistance at the January high of US$10.76 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week' s low of US$9.78 1/4 a bushel.

 

The Buenos Aires Cereals exchange slashed its forecast for 2008-09 soybean production to 37 million metric tonnes on Wednesday, down 2.4 million tonnes from last week's forecast. A brutal drought this season has seen production prospects plunge despite a record area planted.

 

U.S. Department of Agriculture reported total weekly soybean export sales were a net 810,100 metric tonnes for the week ended April 9. Sales for 2008-09 were a net 808,300 metric tonnes, with the primary buyer of 405,800 tonnes. Analysts had forecast sales between 400,000 and 850,000 metric tonnes.

 

Soymeal sales were a net 167,300 tonnes. Trade estimates ranged from 75,000 to 175,000 tonnes. Soyoil commitments were 15,200 metric tonnes. Analysts had forecast sales between 5,000 and 20,000 tonnes.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Thursday, in line with gains by counterparts on CBOT's electronic board during the Asian day. Crude palm oil futures on Malaysia's derivatives exchange fell Thursday in what trade participants said was a "timely" downward price correction.