April 25, 2008

 

CBOT Soy Outlook on Friday: Down 15-20 cents; follow-through technical sales

 

 

Soybean futures on the Chicago Board of Trade are expected to start Friday's day session lower, pressured by follow-through technical selling from Thursday's declines.

 

CBOT soybean futures are called to start the session 15 to 20 cents lower.

 

In overnight electronic trading, July soybeans were 17 1/2 cents lower at US$13.43 1/2, November soybeans were 12 cents lower at US$12.28 1/2. July soyoil was 47 points lower at 60.40 cents per pound and July soymeal was US$4.80 lower US$345.00 per short tonne.

 

Carryover weakness from Thursday and the overnight session should weigh on prices, with strength in the U.S. dollar expected to produce profit-taking pressure, analysts said.

 

Speculative long liquidation is expected to be a feature, with technical weakness and market uncertainties enticing traders to take a cautious approach and reduce some risk exposure heading into the weekend, analysts added.

 

Technically, the market is struggling to find an near-term identity, with concerns over unresolved issues in Argentina, U.S. acreage uncertainties and questions of whether demand rationing is beginning, keeps prices hovering in a 2 1/2 week old wide trading range, a CBOT floor broker said.

 

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$13.72 and then at Thursday's high of US$13.88. First support is seen at US$13.50 and then at US$13.32.

 

In other news, after a wave of rejected complaints, two federal judges in Argentina have agreed to hear lawsuits over the constitutionality of the government's recent increase in the export tax on soybeans, local daily Noticias AgroPecuarias reported Thursday. The complaints filed in Buenos Aires and Entre Rios provinces say the higher taxes constitute a taking, or an unconstitutional seizure of property. The suits also say it is the place of Congress to impose taxes, not the executive branch, which has employed emergency power decrees to bypass the legislative branch since a financial meltdown in 2002.

 

Chinese importers booked a total of four to six cargoes of soybeans from the U.S., Argentina and Brazil this week, according to data issued by Shanghai JCI Friday. The amount was much lower than the 17 to 19 cargoes the country booked last week as uncertainty about a possible resumption of farmers' strike in Argentina and a gradually strengthening U.S. dollar make purchasers cautious, an analyst from the grain consultancy firm said.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended lower Friday on expectations of a cut in Indonesia's export taxes and pre-weekend profit-taking, but positive export numbers trimmed losses in thin trade, said trade participants. The benchmark July contract on the Bursa Malaysia Derivatives ended MYR41 lower at MYR3,419/tonne after reaching an intraday low of MYR3,388.

 

China's soybean futures traded on the Dalian Commodity Exchange settled lower Friday, in tandem with the fall of their counterparts at CBOT Thursday. The benchmark January 2009 soybean contract settled RMB53, or 1.3%, lower at RMB4,118 a metric tonne, after trading between RMB4,100-4,135/tonne.