July 18, 2008

 

CBOT Soy Outlook on Friday: Seen 7-9 cents up in rebound from Thursday

 

 

Chicago Board of Trade soybean futures are expected to start Friday's day session firmer in a rebound from sharp losses Thursday and on strength in crude oil, with underlying support seen from worries about tight supplies.

 

CBOT November soybeans are called to open 7 to 9 cents per bushel higher. In overnight electronic trading, CBOT November soybeans jumped 8 1/4 cents to US$15.06 1/4.

 

The market should find support from ideas that a 50-cent sell-off Thursday was overdone, a CBOT floor analyst said. Soybeans will be closely watching outside markets, with crude oil rising ahead of the opening, he said.

 

The weather for U.S. soybeans has been "nearly ideal" recently, which is bearish, and there is little in the short-term forecast to change that, said Tomm Pfitzenmaier, analyst for Summit Commodity Brokerage. Rainfall moving through the Midwest during the next three to five days will encourage mainly favorable growing conditions for soybeans and corn "well into next week," DTN Meteorlogix said.

 

"But there is little doubt about the tightness of the U.S. carryout and that should ultimately support bean prices," Pfitzenmaier said. "If the market gives you a chance to own beans at a lower levels, that should be viewed as a buying opportunity, but don't risk a lot. Put your stops under the lows and if they can't hold, be quick to exit."

 

It remains bearish that Argentina's senate this week rejected a controversial grain export tax pushed by the president, traders said. Protests over the export tax had impeded Argentina's soy and soy product exports at times and sent demand to the U.S. from South America.

 

The senate's vote "will mean that bean exports out of Argentina will resume at the expense of U.S. exports," Pfitzenmaier said.

 

Bulls have the near-term technical advantage in soybeans, and no serious chart damage has occurred from recent losses, a technical analyst said. However, a bearish weekly low close on Friday could begin to inflict near-term damage, he said.

 

The next upside price objective for bulls is to push and close November soybeans above solid technical resistance at US$15.66, the technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at the July low of US$14.81, he said.

 

First resistance for November soybeans is seen at US$15.15 and then at US$15.30. First support is seen at Thursday's low of US$14.90 and then at US$14.81.

 

In Asian markets, soybean prices in China's major producing areas were little changed in the week to Friday, supported by stable purchases from processing plants. Soybean prices in Harbin city in Heilongjiang province, the biggest producer, were around RMB5,340 a metric tonne, unchanged from a week ago.

 

Chinese importers booked 15-17 cargoes of soybeans this week, up sharply from 7-9 cargoes last week, commodity consultancy firm Shanghai JCI said. The scaled-up purchasing was due to falling U.S. prices, and the soybeans were mainly from the U.S. and Brazil for delivery in August and November, an analyst said.

 

Crude palm oil futures on Malaysia's derivatives exchange ended 1.3% lower Friday, plunging to a fresh 10-week low. The benchmark October contract on the Bursa Malaysia Derivatives ended MYR43 lower at MYR3,392/tonne after reaching an intraday low of MYR3,358/tonne.