May 16, 2008

 

CBOT Soy Outlook on Friday: Up 10-15 cents; argentine strike, outside markets

 

 

Soybean futures on the Chicago Board of Trade are expected to start Friday's day session firm, supported by an extended Argentina farmers' strike and supportive outside market influences.

 

CBOT soybean futures are called to start the session 10 to 15 cents higher. In overnight electronic trading, July soybeans were 15 1/4 cents higher at US$13.62 3/4, November soybeans were 15 cents higher at US$13.34 1/4. July soyoil was 86 points higher at 60.89 cents per pound and July soymeal was US$2.90 higher US$347.90 per short tonne.

 

The market is poised to extend the higher overnight theme, buoyed by the extension of the Argentine farmers' strike, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The bottom line is cargoes will shift from Argentina to Brazil and the U.S., and the U.S. already has a tight balance before it absorbs any increased demand, Roose added.

 

Argentina's farmers decided to extend a nationwide farm strike until at least next Wednesday, when they will meet to consider their next moves, the leaders of the four leading farm groups announced at a press conference Thursday.

 

The groups also sent a letter to President Cristina Fernandez requesting an urgent meeting to discuss a polemic export tax on grains farmers are protesting and other issues, but the government has so far refused to budge on the tax.

 

Outside markets are seen lending support, with sharply higher crude oil, silver and gold futures attracting speculative buying as well, analysts said.

 

Meanwhile, open windows of opportunities for corn plantings to progress rapidly in the Midwest is seen limiting acreage switching to soybeans, and with futures ability to settle above key technical support Thursday, the market seems firmly underpinned, Roose added.

 

A technical analyst said prices are still trapped in a big sideways trading range between the April high of US$14.15 and the May low of US$12.44 basis the July contract. The next downside price objective for July soybeans is pushing and closing prices below solid technical support at US$13.00. The next upside price objective is to push and close prices above solid technical resistance at this week's high of US$13.87 a bushel.

 

First support for July soybeans is seen at US$13.20 and then at Thursday's low of US$13.12. First resistance is seen at US$13.50 and then at Thursday's high of US$13.77.

 

The U.S. Department of Agriculture announced Friday private export sales of 253,000 metric tonnes of soybeans for delivery to China in the 2008-09 marketing year.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Friday after Argentine farmers said overnight that they will extend their strike. The benchmark January 2009 soybean contract settled RMB35 higher at RMB4,499 a metric tonne, or up 0.84%.

 

China's cash soybean prices in the major producing regions were mostly stable in the week to Friday, as there wasn't much tradable soybeans left on the market and farmers were reluctant to sell.

 

China bought five to six soybean cargoes from the U.S. and Brazil this week, up from three-to-five cargoes last week, according to data from commodity consultancy firm Shanghai JCI Friday. The soybeans bought this week will be delivered in June and July, said an analyst from the firm.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 1.3% higher Friday as some investors covered their shorts, taking leads from a recovery in soyoil prices and expectations of a bullish price outlook coming out of a conference next week in Jakarta, trade participants said. August CPO futures ended MYR46 higher at the intraday high of MYR3,570 a metric tonne.