April 23, 2008

 

CBOT Soy Outlook on Wednesday: Seen up as demand drivers underpin prices

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session firm, garnering strength from demand driven fundamentals with concerns over a possible resumption of an Argentine farmers' strike an underpinning influence.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

In overnight electronic trading, July soybeans were 4 cents higher at US$13.93 1/2 while November soybeans were 2 cents lower at US$12.75. July soyoil was 7 points lower at 61.63 cents per pound and July soymeal was US$0.80 lower US$358.90 per short tonne.

 

The market is poised to extend the higher overnight theme, as concerns over tightening U.S. inventories in the face of strong underlying demand serve as the catalyst to keep bullish psychology in the market, analysts said.

 

Talks in Argentina's farmers' strike situation continue to be strained, leaving the market bracing for Asian and European demand to return to U.S. shores amid the reliability of U.S. supplies, analysts added.

 

Positive technical signals from Tuesday's sharp gains are expected to feed bullish enthusiasm as well, traders said.

 

However, outside market influences are seen applying pressure to the market, with a firmer U.S. dollar index in conjunction with lower crude oil, gold and silver prices attracting some speculative profit taking, traders added. Meanwhile, lingering uncertainties surrounding 2008 acreage are expected to limit advances in new crop futures, a trader added.

 

A technical analyst said market bulls have quickly regained some fresh upside technical momentum. The next downside price objective for July soybeans is pushing and closing prices below solid technical support at Tuesday's low of US$13.48. The next upside price objective is to push and close prices above solid technical resistance at last week's high of US$14.15 a bushel.

 

First resistance for July soybeans is seen at Tuesday's high of US$14.00 and then at US$14.15. First support is seen at US$13.80 and then at US$13.72.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday in line with Tuesday's rise at CBOT. The benchmark January 2009 soybean contract settled RMB68 higher at RMB4,209 a metric tonne after trading between RMB4,189 and RMB4,249/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 3.2% higher Wednesday in anticipation of strong Indian demand for palm olein, uncertainty over soyoil shipments from Argentina and strong overnight gains in soyoil and crude oil, said trade participants. The benchmark July contract on the Bursa Malaysia Derivatives ended MYR110 higher at MYR3,550/tonne after reaching intraday high of MYR3,560.

 

In other news, India's soymeal exports are likely to reach 400,000 metric tonnes this month, up from around 250,000 tonnes in April 2007, on a rise in output, higher returns and uncertainty over shipments from Argentina, a senior trade executive said Wednesday. India's soy meal export shipments are likely to reach 900,000 tonnes between May and September, said Rajesh Agrawal, coordinator for the Soybean Processors Association based in the central Indian town of Indore.