May 15, 2009

 

CBOT Soy Outlook on Friday: Seen up; fundamental, technical strength

 

 

Chicago Board of Trade soybean futures are poised to start Friday's day session with modest gains, in step with overnight advances amid technical momentum and a strong fundamental base.

 

CBOT soybean futures are forecast to open 2 cents to 3 cents higher, with soy product futures following overnight price action.

 

Tight availability of old crop supplies remains the fundamental driver of the market's bullish uptrend, with solid export demand and a resurgence in the crush expected to keep prices firmly underpinned, analysts said.

 

The market continues to perform strongly, finding buyers on breaks and allowing futures to continue their push to higher levels, analysts added.

 

The most active July future set a 7 1/2 month high Thursday, gaining momentum with speculative buyers emerging once futures push through overhead technical resistance on charts.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above psychological resistance at US$12.00 a bushel. The next downside price objective is pushing and closing prices below solid support at US$10.50 a bushel.

 

The July/November bull spread continues to point to a bullish scenario, widening by 10 cents Thursday. Lingering planting delays are supporting the back end of the market, but with old crop futures needing to rally to ration demand, nearby contracts are finding strong support.

 

However, traders are on guard for signs of upside exhaustion after a 2 1/2 month rally, with early weakness in equities, crude oil and a firmer U.S. dollar opening the door for some end-of-week profit taking to surface, a CBOT floor analyst said.

 

DTN Meteorlogix Weather said a new round of heavy rains Friday will likely further delay field work and planting in U.S. Midwest. After this system moves by there may be a period of drier weather. However, it will take awhile before some fields in the eastern Midwest dry out enough to allow significant planting to occur.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Friday, supported by gains on CBOT Thursday. Cash soybean prices in China's major producing areas rose in the week ended Friday as farmers were busy with spring planting, resulting in less supply in the market.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Friday on profit-taking and liquidation of long positions ahead of the weekend, said trade participants.