May 3, 2008

 

CBOT Soy Review on Friday: Solid gains on short covering, Argentina news

 

 

Soybean futures at the Chicago Board of Trade closed solidly higher and near the session high Friday, boosted by short covering and fresh speculative bargain-hunting buying.

 

July soybeans closed up 34 cents at US$13.05 a bushel. New-crop November beans closed up 24 3/4 cents at US$12.18 a bushel.

 

Solid gains in crude oil and gold futures prompted fresh interest on the long side of soybeans, despite a stronger U.S. dollar Friday. The stronger greenback had been a bearish influence on the soy complex earlier in the week, but traders chose to ignore dollar on Friday.

 

Commercial buying was also seen in July soybeans during the trading session, said Brian Hoops, grain broker/analyst with Midwest Market Solutions. He added that bulls spreading was featured, whereby the nearby contracts are purchased and the deferreds sold.

 

The farmer strike in Argentina was deemed bullish by soybean traders Friday, based upon the latest news coming from that country. "While initial reports out of the country signaled farmers weren't likely to block roads, there are also reports the Argentine government has failed to restart beef shipments today, as promised, which could frustrate at least a portion of farmers," according to a report issued Friday by Pro Farmer. "The situation in Argentina remains very fluid," the report said.

 

Weather continues to be an underlying bearish factor that remains in the back of traders' minds. Another round of rain is moving through the Corn Belt, which will further slow corn planting. "It's looking more likely that some acres will get shifted to soybeans as next week's forecast suggests more rains, again," said Brian Grete, senior market analyst with Pro Farmer.

 

Technically, for July soybeans the next downside price objective for the bears is pushing and closing prices below solid technical support at this week's low of US$12.44. The next upside price objective for the bean bulls is to push and close prices above solid technical resistance at this week's high of US$13.57 a bushel. First resistance for July soybeans is seen at Friday's high of US$13.11 and then at US$13.22. First support is seen at 12.80 and then at Friday's low of US$12.65.

 

SOY PRODUCTS

 

Soybean meal and soybean oil futures also closed solidly higher and near the session high Friday, boosted by fresh bargain-hunting buying interest after recent losses and on short covering.

 

July soybean meal futures closed up US$8.00 at US$337.50 a tonne. July soybean oil futures closed up 87 points at 57.22 cents.

 

Strong gains in key "outside markets" crude oil and gold supported buying interest in the soy complex, especially in bean oil, said an analyst.

 

Overnight reports said Egypt bought 25,000 MT of soyoil. No origin was given on the purchase.

 

For July soybean meal, the next downside technical price objective for the bears is pushing and closing prices below solid support at this week's low of US$322.20. The next upside price objective for the bulls is to produce a close above solid technical resistance at this week's high of US$352.00. First resistance comes in at Friday's high of US$340.00 and then at US$344.00. First support is seen at US$334.00 and then at US$330.00.

 

For July bean oil, the bears' next downside technical price objective is pushing and closing prices below solid support at this week's low of 55.83 cents. The next upside price objective for the bean oil bulls is pushing and closing prices above solid technical resistance at 59.00 cents. First resistance is seen at Friday's high of 58.20 cents and then at 59.00 cents. First support is seen at Friday's low of 56.05 cents and then at 55.83 cents.