November 13, 2009
CBOT Soy Outlook on Friday: Up 3-5 cents on demand, follow through buying
Soybean futures on the Chicago Board of Trade are poised for a firmer start to Friday's day session, supported by follow through buying from Thursday's session and solid export demand.
CBOT soybean futures are seen starting 3 to 5 cents higher. In overnight trade, November soybeans were 5 3/4 cents higher at US$9.88, and January soybeans were 3 1/4 cents higher at US$9.93 1/4.
Demand is the fundamental strength of the market, with strong weekly export sales and shipments serving as catalysts for upside movement, as the market shifts its focus from production to demand, analysts said.
The dollar is not standing in the way of an upside move in early trade, and with lingering concerns about a potential pick up in domestic soymeal demand due to quality issues surrounding distillers dried grain, futures are targeting higher levels, a CBOT floor analyst said.
Meanwhile, the absence of hedge pressure as the harvest draws to an end and trader's willingness to add some risk premium until the South American crop is sown are expected to underpin prices as well.
However, end of the week position evening and large global supply outlooks is seen limiting advances, keeping prices trading within a recent trading range.
A technical analyst said first resistance for January soybeans is seen at Thursday's high of US$9.96 1/2 and then at US$10.00. First support is seen at US$9.80 and then at US$9.75.
The U.S. Department of Agriculture reported total weekly soybean export sales were a net 1,272,500 metric tonnes for the week ended Nov. 5. The primary buyer was China with 961,200 tonnes. Analysts had forecast sales between 500,000 and 700,000 metric tonnes. USDA reported a marketing year high 1,636,200 metric tonnes were shipped in the week ended Nov. 5, with China the primary destination for 1,130,000 tonnes.
Soymeal sales were a net 224,200 tonnes. Trade estimates ranged from 75,000 to 200,000 tonnes. Soyoil commitments were 5,800 metric tonnes. Analysts had forecast sales between 5,000 and 25,000 tonnes.
In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Friday as speculative money flowed in after prices breached recent resistance levels. The benchmark September 2010 soybean contract settled RMB26 higher at RMB3,756 a metric tonne.
China's cash soybean prices in major producing areas were lower in the week to Friday, as government subsidies for crushers damped their interest in local supplies.
