May 23, 2008

 

CBOT Soy Outlook on Friday: Up 15-17 cents; add premium, outside strength

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session firm, buoyed by supportive outside market influences, unresolved strike issues in Argentina and the need to add some risk premium ahead of an extended holiday weekend, analysts said.

 

CBOT soybean futures are called to start the session 15 to 17 cents higher. In overnight electronic trading, July soybeans were 16 1/4 cents higher at US$13.41, November soybeans were 18 1/4 cents higher at US$13.42 1/2. July soyoil was 114 points higher at 62.97 cents per pound and July soymeal was US$0.10 higher US$328.10 per short tonne.

 

The absence of fresh definitive fundamental news is keeping futures coiling around the movements of outside markets, with higher crude oil and precious metal prices in conjunction with a weaker U.S. dollar attracting some inflationary based buying, analysts said.

 

Issues surrounding disputes between Argentine farmers and the government are still up in the air, and with rains slowing some planting progress in northern areas as well as cool temperatures raising concerns over germination, traders are electing to add risk premium ahead of a long weekend, a CBOT floor broker said.

 

However, the market isn't expected to break out of its sideways trading range, as traders will look to square some positions heading into a holiday weekend amid the looming uncertainties of acreage and demand, he added.

 

A technical analyst said 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 Thursday's high of US$13.67 1/4 a bushel.

 

First support for July soybeans is seen at Thursday's low of US$13.12 1/2 and then at US$13.00. First resistance is seen at US$13.40 and then at US$13.50.

 

Meanwhile, Argentina's farm leaders said they were disappointed and worried after a meeting with Cabinet Chief Alberto Fernandez late Thursday, but held off from threatening to resume a strike lifted Wednesday to facilitate talks with the government over grain export taxes.

 

Farmers plan to hold a large protest rally in the agricultural processing and export center of Rosario on the May 25 Independence Day holiday to voice their complaints.

 

In other news, Chinese traders bought four-five cargoes of soybeans from the U.S. and Brazil this week, said commodity consultancy firm Shanghai JCI Friday. The soybeans bought from Brazil are to be delivered in July, while the soybeans from the U.S. are to be delivered in November, said an analyst with the firm.

 

The uncertainty caused by the Argentine farmers' strike prompted some Chinese importers to delay or wash some soybean cargoes, said the analyst.

 

In overseas markets, China's soyoil futures traded on the Dalian Commodity Exchange settled lower Friday, pressured by the exchange's move to reduce speculative behavior. The benchmark September 2008 soyoil contract settled RMB250, or 2.2%, lower at RMB11,040 a metric tonne. The benchmark January 2009 soybean contract settled RMB37, or 0.8%, lower at RMB4,491 a metric tonne.

 

Cash soybean prices in China's major producing regions were mostly stable in the week ended Friday, although prices were higher in some areas as farmers were reluctant to sell.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Friday, recovering from early losses, tracking similar gains in soybean oil and crude oil prices and a bullish price forecast, said trade participants. The benchmark August CPO contract on the Bursa Malaysia Derivatives ended MYR44 higher at MYR3,654 a metric tonne.