June 5, 2008

 

CBOT Soy Outlook on Thursday: Seen 15-20 cents up on technical strength, strike

 

 

Chicago Board of Trade soybean futures are expected to start Thursday's day session 15 to 20 cents per bushel higher on technical strength and continued bullishness about a farmers' strike in Argentina, analysts said.

 

In overnight electronic trading, nearby CBOT July soybeans jumped 20 1/2 cents to US$14.09 1/2.

 

The market should continue to show technical power after July soybeans Wednesday closed at a seven-week high near US$14, a market analyst said. The nearby contract topped US$14 overnight, and its next upside target is in the area of US$14.43, he said.

 

"The market technically looked pretty impressive, as it ran up against the US$14 mark," the market analyst said.

 

Prices are now trading at the "very top of a six-week-old sideways trading range between the April high of US$14.15 and the May low of US$12.44," a technical analyst said. An upside "breakout" from this trading range would be significantly bullish to suggest a fresh leg up in prices in the near term, he said.

 

The next downside price objective for the bears is pushing and closing July soybeans below solid support at this week's low of US$13.46 1/2, the technical analyst said. The next upside price objective for the bean bulls is to push and close prices above solid resistance at US$14.15, he said.

 

First support for July soybeans is seen at US$13.65 and then at US$13.46 1/2. First resistance is seen at Wednesday's high of US$14.00 and then at US$14.15.

 

An ongoing farmers' strike in Argentina remains bullish for the soy market. The strike indicates soy demand will continue to shift to the U.S., a CBOT floor analyst said.

 

Wet weather and slow development of the U.S. soy crop should add additional strength, an analyst said. The Midwest weather pattern continues to feature frequent episodes of locally heavy thunderstorms, according to DTN Meteorlogix.

 

"The unresolved Argentine situation is supportive," said Brian Hoops, president of Midwest Market Solutions, in a note to clients. "Slow emergence of soybeans is also providing support."

 

Weekly U.S. soybean export sales were "nothing too spectacular," a trader said. The U.S. Department of Agriculture said total sales for the week ended May 29 were 581,600 tonnes, within trade expectations of 300,000 to 750,000 tonnes.

 

Total weekly soymeal export sales of 287,500 tonnes were "excellent," a trader said. Analysts had expected soymeal sales of 75,000 to 175,000 tonnes. Total weekly soyoil export sales were 9,100 tonnes, within trade estimates of zero to 10,000 tonnes.

 

In other news, crude palm oil futures on Malaysia's derivatives exchange ended 2.6% higher Thursday. The market erased nearly all the previous day's losses on fresh buying and short covering by investors.