May 31, 2007

 

CBOT Soy Outlook on Thursday: Up 3-5 cents on carryover, weather concerns

 

 

Soybean futures on the Chicago Board of Trade are expected to start Thursday's day session on firm footing, taking its cue from overnight price strength, with follow-through technical buying from Wednesday's gains extending the higher theme, analysts said.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

In overnight e-CBOT trading, July soybeans were 4 3/4 cents higher at US$8.13 per bushel, and November were 5 cents higher at US$8.42.

 

Carryover buying from Wednesday is seen leading prices higher, with the market supported by upside technical momentum and lingering concerns over private forecasts calling for a possible moisture blocking ridge to form in the Midwest in longer range outlooks, analysts said.

 

Near-term weather conditions for Midwest crops are favorable, but with speculative traders heavily long, bullish longer range outlooks are trumping current conditions amid outlooks for a long term draw down of soybean stocks, a CBOT floor analyst said.

 

Added strength is seen from sharply higher overnight prices in Malaysian palm oil futures which should lend support to soyoil futures, analysts added.

 

Meanwhile, technical factors will play a key role in price direction, with traders targeting contract highs in new crop contracts, traders said. Overnight, the new crop November future came within 1/4 cent of matching its contract high of US$8.43.

 

A technical analyst said the market regained bullish momentum Wednesday after big losses Tuesday. The next upside price objective for July soybeans is closing prices above solid technical resistance at last week's high of US$8.13. The next downside price objective is closing prices below solid support at US$7.90.

 

First resistance for July soybeans is seen at Wednesday's high of US$8.10 1/2 and then at US$8.13. First support is seen at US$8.00 and then at Wednesday's low of US$7.94.

 

The DTN Meteorlogix Weather Service forecast said rain and thunderstorms will maintain favorable moisture conditions for emerging and developing crops in the western Midwest near term. In the eastern Midwest, mostly light shower activity and warm temperatures will favor crops but the rain will not be enough to recharge soil moisture.

 

In demand news, Taiwan's Breakfast Soybean Procurement Association bought 58,000 metric tonnes of Brazilian soybeans from trading house Bunge in a tender concluded late Wednesday, a trader in Taipei said Thursday.

 

In other news, India has retained the base import prices of palm oils and crude soyoil unchanged at existing levels, a government statement said Thursday. In India, import duties on palm oils and crude soyoils are calculated at a fixed price regardless of the price at which they are imported. Until August last year, these prices were changed every two weeks in line with international prices but the practice was stopped to keep a check on local prices.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Thursday as friendly export data and higher soyoil futures helped the market regain its upward momentum. The benchmark August contract ended at MYR2,581 a metric tonne, up MYR81 from Wednesday to reach its highest closing level on record.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Thursday, following Wednesday's CBOT gains. The benchmark January 2008 soybean contract settled RMB27 higher at RMB3,312 a metric tonne.