May 22, 2009

 

CBOT Soy Outlook on Friday: Up 8-10 cents on dollar, demand, weather

 

 

Chicago Board of Trade soybean futures are expected to open higher Friday on a weaker dollar, planting delays and continued strong demand.

 

Soybeans are called 8 to 10 cents higher. In overnight trade, July soybeans were up 9 3/4 cents to US$11.84 3/4 per bushel and November soybeans were up 14 1/4 cents to US$10.37 3/4.

 

July soyoil was up 42 points to 38.40 cents per pound and July soymeal was up US$3.20 to US$382.40 per short tonne.

 

The ongoing weakness in the dollar, along with higher crude oil, is setting a supportive tone in general for commodities, traders said. Soybeans has plenty of its own support, analysts add.

 

Bill Nelson, analyst with Doane Advisory Services, said a wetter forecast for next week in southern Illinois, Indiana and Ohio supported the market overnight, as the crop falls further behind.

 

Farmers plant soybeans after they finish corn, but they are still in the midst of corn planting in many areas. Soybean yields will start to suffer as planting is delayed further.

 

"If you get at least half the crop planted by May 20th, you have real good yields," Nelson said. "Then it starts to slowly degrade between May 20 and the end of the month and then it kind of plummets in June."

 

Demand remains a bullish factor, highlighted by very strong export sales reported Thursday, including strong sales to China.

 

The sales "were a wakeup call that we're not doing enough work on demand rationing," a trader said. Tight old crop supplies are fueling the market's bullish sentiment, he said.

 

July soybeans on Thursday closed firmer and nearer the session high and closed at a fresh 7 1/2-month high close, a technical analyst said.

 

The next upside price objective for the bean bulls is to push and close July prices above psychological resistance at US$12.00 a bushel, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid support at the April high of US$10.64 1/2 a bushel.

 

First resistance for July soybeans is seen at Thursday's high of US$11.77 1/2 and then at this week's high of US$11.89 1/2, the technical analyst said. First support is seen at US$11.60 and then at Thursday's low of US$11.50.

 

Nelson said the November contract is right at key resistance of US$10.40, the January high.

 

In other markets, soybean futures traded on the Dalian Commodity Exchange settled higher Friday as a continued rise on the Chicago Board of Trade has made domestic soybeans more competitive.

 

The benchmark January 2010 soybean contract settled RMB50 a metric tonne higher at RMB3,626/tonne, up 1.4%.

 

Also, crude palm oil futures on Malaysia's derivatives exchange rose Friday on a price correction prompted by stronger soyoil futures and a sharp fall in CPO prices Thursday, said trade participants.