April 17, 2009

 

CBOT Soy Outlook on Friday: Seen up; fundamentals to extend up trend

 

 

A strong fundamental base is seen extending the upward trend in Chicago Board of Trade soybean futures Friday.

 

CBOT soybean futures are called to open 7 cents to 9 cents higher.

 

The market remains underpinned by a bullish fundamental picture, with tight domestic stocks, strong export demand, and uncertainties surrounding Argentina's crop and export potential serving as the catalyst, analysts said.

 

The market continues to search for price levels that will ration demand and secure adequate 2009 acreage to alleviate a tight supply scenario from carrying over into the 2009-10 marketing year, a CBOT floor analyst said.

 

An otherwise quiet news front is expected to keep the bullish theme in place, with a lack of pressure from outside markets aiding the supportive tone.

 

However, traders will remain on guard for buying exhaustion following a 6-week rally. The market continues to satisfy near term upside technical objectives, but light pressure may arise from recent longs booking some profits heading into the weekend, a cash connected CBOT broker said.

 

A technical analyst said while soybean bulls still have the near-term technical advantage, prices are now short-term technically overbought and due for a downside correction very soon.

 

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 and psychological support at US$10.00 a bushel.

 

U.S. Department of Agriculture announced Friday that private exporters reported the sale of 275,000 metric tonnes of soybeans to unknown destinations. Of that total, 55,000 tonnes are for delivery in the 2008-09 marketing year and 220,000 tonnes are for delivery in the 2009-10 marketing year.

 

Meanwhile, in a rare development, the premium and discount between major vegetable oils, including palm olein, soybean oil and sunflower oil have almost disappeared and they are selling at par with each other due to tight inventories globally, trading executives said Friday.

 

CBOT soy product futures are seen higher, in line with overnight price strength.

 

Chinese demand for imported soybeans will fall in the coming weeks as domestic supply is ample while global prices keep rising, said China National Grain and Oils Information Center in a note issued Friday.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Friday, supported by the strong gains on CBOT Thursday.