April 24, 2008

 

CBOT Soy Outlook on Thursday: Up 4-6 cents following overnight; demand driven

 

 

Soybean futures on the Chicago Board of Trade are poised to start Thursday's day session higher, in tune with overnight trade, as bullish demand outlooks and technicals remain supportive features, analysts said.

 

CBOT soybean futures are called to start the session 4 to 6 cents higher.

 

In overnight electronic trading, July soybeans were 2 1/2 cents higher at US$13.88, November soybeans were 3 cents higher at US$12.61. July soyoil was 41 points lower at 61.55 cents per pound and July soymeal was US$0.90 higher US$356.90 per short ton.

 

The demand prospects linked to a possible resumption of an Argentina farmers' strike next week continues to support futures, and with prices holding above key technical levels, bullish psychology remains in the market, analysts said.

 

The Argentine strike seems imminent, as the government has issued a new "supply law" in which farmers who hold back their supply of essential goods from the domestic market could be fined, imprisoned or have their property confiscated, Mike Zuzolo, analyst with Risk Management Commodities Inc., said in a morning market report.

 

The market remains demand-driven, but weakness in outside inflationary markets in conjunction with a firmer U.S. dollar index is seen limiting upside momentum, a CBOT floor trader said.

 

Technical factors are expected to be featured in the absence of surprises in weekly export sales and lower-than-expected crush data, traders said.

 

However, rumors circulating that the Argentine government may possibly suspend the tax on exports that farm groups oppose, is a negative feature, that may produce cautious activity as traders await news on the strike and watch Midwest weather for hints at 2008 acreage, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

A technical analyst said the next downside price objective for July soybeans is pushing and closing prices below solid technical support at US$13.50. 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 US$14.00 and then at Wednesday's high of US$14.08 1/2. First support is seen at Wednesday's low of US$13.74 and then at US$13.50.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were 376,100 metric tonnes or 13.8 million bushels for the week ended April 17. Analysts had forecast sales between 200,000 and 500,000 metric tonnes. The sales were primarily for Mexico with 170,500 metric tonnes, Indonesia with 135,100 tonnes, and China with 52,600 tonnes.

 

Soymeal sales were a net 149,800 tonnes, within trade estimates of 75,000 to 175,000 tonnes. Soyoil commitments were 25,100 metric tonnes, above trade estimates of 5,000 to 20,000 tonnes.

 

The U.S. Census Bureau pegged the March crush at 152.6 million bushels, up from the February crush figure of 144.4 million bushels. In a survey of analysts, the average of estimates was 155.95 million bushels. March soymeal stocks were reported at 395,416 short tonnes, up from the 330,959 tonnes in February, as well as above the average of estimates at 317,400. Soyoil stocks came in at 2.910 billion pounds, down from February stocks of 3.079 billion and below the average estimate of 2.938 billion pounds.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Thursday on concerns about government policy dealing with price control. The benchmark January 2009 soybean contract settled RMB38 lower at RMB4,171 a metric tonne after trading between RMB4,152 and RMB4,191/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Thursday in thin trade as weak soyoil futures and anticipation of a lower Indonesian export tax on palm oil pressured prices down, while also keeping many participants on the sidelines, trade participants said. The benchmark July contract on the Bursa Malaysia Derivatives ended MYR90 lower at MYR3,460 a metric tonne, near the intraday low of MYR3,454/tonne.