October 18, 2007

 

CBOT Soy Outlook on Thursday: Up 6-8 cents on inflationary induced buying

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's day session on firm footing, following the overnight theme, supported by strength in outside inflationary markets.

 

CBOT soybean futures are called to start the session 6 to 8 cents higher.

 

In overnight e-CBOT trading, November soybeans were 7 3/4 cents higher at US$9.82 per bushel, and January soybeans were 7 1/4 cents higher at US$10.00 1/4.

 

The market is poised for a higher opening, with advances inflationary induced amid weakness in the U.S. dollar, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The dollar weakness is providing broad based support in commodity markets, with crude oil and metal futures up overnight, analysts said.

 

Higher crude oil futures are expected to support soyoil futures and subsequently underpin soybeans in the process, a CBOT trader said.

 

A quiet news front is expected to keep traders' eyes on outside markets for direction, with the ability of the market to hold technical support Wednesday an underpinning feature as well, Roose said.

 

However, futures have been lacking fresh fodder to sustain moves above the US$10.00 level in the midst of the fall harvest, with producer selling and the rolling of speculative positions out of the November contract limiting upside potential, said Farm Futures analyst Arlan Suderman in a market report.

 

A technical analyst said market bulls still have a near-term technical advantage, and can correctly argue that a bull flag pattern has formed on the daily bar chart. But another down day on Thursday would negate that pattern, he added. The next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00. The next downside price objective is closing prices below solid support at US$9.60.

 

First resistance for November soybeans is seen at US$9.79 and then at Wednesday's high of US$9.87 1/2. First support is seen at Wednesday's low of US$9.68 and then at US$9.60.

 

U.S. Department of Agriculture reported weekly soybean export sales were 770,100 metric tonnes for the week ended Oct. 11. The sales were primarily for China with 192,000 metric tonnes, Mexico with 122,400 tonnes, and Japan with 92,100 tonnes. Analysts had forecast sales between 400,000 and 1,000,000 metric tonnes. Soymeal sales were a net 109,900 tonnes, and soyoil commitments were 26,400 metric tonnes.

 

The DTN Meteorlogix Weather Service forecast said wet or very wet weather moving through the Midwest likely means delays and disruptions to corn and soybean harvests.

 

In Brazil, recent rainfall has helped improve soil moisture for planting early soybeans in Mato Grosso, however more rain is needed. A few showers and thundershowers are in the region Thursday morning, with showers also possible Friday and Saturday, but with low coverage.

 

In other news, Argentina's 2007-08 soy area is expected to be up 2.2% on the year, totaling 16.5 million hectares, the Agriculture Secretariat said in its monthly crop report Wednesday.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mixed Thursday, following CBOT losses Wednesday. The benchmark May 2008 soybean contract settled RMB9 higher at RMB4,222 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended slightly higher Thursday on upcoming demand from an Indian cooperative, after testing both sides of the previous close, market participants said. The benchmark January CPO contract on Bursa Malaysia Derivatives, ended at an intraday high of MYR2,735 a metric tonne, up MYR21 from Wednesday.