May 30, 2008

 

CBOT Soy Outlook on Friday: Down 8-10 cents, overnights; Argentina government tax cut

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session lower, following the overnight theme amid conciliatory moves by the Argentine government to resolve the country's farmers' strike, analysts said.

 

CBOT soybean futures are called to start the session 8 to 10 cents lower. In overnight electronic trading, July soybeans were 12 1/2 cents lower at US$13.10 1/4, November soybeans were 13 3/4 cents lower at US$13.07 3/4. July soyoil was 36 points lower at 59.94 cents per pound and July soymeal was US$2.00 lower US$329.80 per short tonne.

 

The fact that the Argentine government cut its tax on soy exports is a gesture that they are willing to work to resolve the farmer's strike and that should apply pressure to prices in early trade, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

However, a bounce in outside inflationary markets from Thursday's losses in expected to support prices and limit downside moves, analysts added.

 

Argentina made a slight concession to striking farmers Thursday, lowering the maximum theoretical export tax on grains that farmers are currently protesting with a nationwide strike. The tax on soy values of between US$600 and US$750 was lowered, bringing a theoretical export tax at these high prices down to 52.7% from 58.5%, Economy Minister Fernandez said. However, some farmers immediately rejected the change as "not enough."

 

End of the week and month position evening is seen creating some volatile activity as well, with reports Argentine farmers weren't satisfied with the government's tax gestures seen creating some mixed tonnees in the market also, analysts added.

 

A technical analyst said the next downside price objective for July soybeans is pushing and closing prices below psychological support at US$13.00. The next upside price objective is to push and close prices above solid technical resistance at US$13.50 a bushel.

 

First support for July soybeans is seen at Thursday's low of US$13.07 3/4 and then at US$13.00. First resistance is seen at US$13.35 and then at US$13.50.

 

The U.S. Department of Agriculture reported total weekly soybean export sales were 508,300 metric tonnes. 2007-08 sales totaled 245,600 tonnes for the week ended May 22. Analysts had forecast sales between 550,000 and 750,000 metric tonnes.

 

Soymeal sales were a net 103,200 tonnes, within trade estimates of 75,000 to 175,000 tonnes. Soyoil commitments were a net sales reduction of 300 metric tonnes. Trade estimates ranged from 15,000 to 25,000 tonnes.

 

In overseas markets, China's soyoil futures traded on the Dalian Commodity Exchange settled sharply lower Friday, tracking the tumble at CBOT and crude oil prices Thursday. The benchmark September 2008 soyoil contract shed RMB442, or 3.9%, to RMB10,888 a metric tonne. Soybean prices were sharply lower. The benchmark January 2009 soybean contract settled RMB106, or 2.3%, lower at RMB4,463/tonne.

 

Cash soybean prices in China's major producing regions were mostly stable in the week to Friday, but analysts expected prices to rise slightly as farmers were reluctant to sell.

 

Chinese importers bought three-four cargoes of soybeans from the U.S. and Brazil this week, according to data from commodities consultancy firm Shanghai JCI Friday.

 

Crude palm oil futures ended 1.87% lower on Malaysia's derivatives exchange Friday, hurt by the weak outlook for Malaysian exports and negative sentiment across the commodities sector, traders said. The benchmark August contract on Bursa Malaysia Derivatives ended MYR67 lower at MYR3,498/tonne.