April 29, 2008

 

CBOT Soy Outlook on Thursday: Seen up 3-5 cents; overnight theme, technical bounce

 

 

Soybean futures are seen starting Tuesday's day session firmer on the Chicago Board of Trade, in tune with overnight price action in a bounce from Monday's sell-off.

 

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

 

In overnight electronic trading, July soybeans were 2 1/2 cents higher at US$13.00, November soybeans were 8 1/2 cents higher at US$12.05. July soyoil was 20 points lower at 58.28 cents per pound and July soymeal was US$1.10 higher US$336.60 per short tonne.

 

The market is expected to experience a minor technical bounce off Monday's losses, with spillover support from higher corn prices lending support, analysts said.

 

The December corn/November soy spread ratio has slipped below 2 to 1, providing an economic incentive for farmers not to switch corn acres to soybeans despite slow corn planting progress, and that is eliciting a price response from soybeans, said Vic Lespinasse, analyst with Grain Analyst.com.

 

However, bearish outside influences are expected to keep a lid on advances, with weakness in crude oil, gold, silver and Asian futures presenting a defensive presence, traders said. Uncertainties surrounding the resumption of the Argentine farmer's strike amid rumors the farm groups are prepared negotiate for another 30 days is seen applying pressure as well, traders added.

 

Otherwise, technically inspired activity will be featured, with traders on guard for additional price weakness after futures dipped below key near term chart support levels Monday, analysts added.

 

A technical analyst said near-term chart damage was inflicted on Monday slide. The next downside price objective for July soybeans is pushing and closing prices below solid technical support at US$12.50. The next upside price objective is to push and close prices above solid technical resistance at Monday's high of US$13.57 a bushel.

 

First resistance for July soybeans is seen at US$13.07 and then at US$13.35. First support is seen at Monday's low of US$12.80 and then at US$12.65.

 

U.S. soybean planting was 2% complete as of Sunday, below the five-year average of 5%, according to U.S. Department of Agriculture. No soybean plantings were reported across the key growing states of Illinois, Iowa, Indiana, Minnesota and Ohio.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Tuesday, following an overnight tumble in CBOT contracts. The benchmark January 2009 soybean contract settled RMB77 lower at RMB4,044 a metric tonne, or down 1.87%, after trading in the RMB4,008-4,081/tonne range.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 4.6% lower Tuesday, hitting 20-day lows on profit-taking amid slow exports and speculation that Argentine growers may extend their deadline to resume a strike to protest against a hike in export taxes, said trade participants. The benchmark July contract on the Bursa Malaysia Derivatives ended MYR161 lower at the day's low of MYR3,349/tonne.