November 16, 2007

 

CBOT Soy Outlook on Friday: Seen up; export sales, outside market support

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session firmer, supported by higher-than-expected weekly export sales and strength in outside inflationary markets, analysts said.

 

The U.S. dollar index is lower while crude oil and metal futures are higher.

 

CBOT soybean futures are called to start the session 2 to 5 cents higher.

 

In overnight e-CBOT trading, January soybeans were 3/4-cent higher at US$10.79 1/2 per bushel, and March soybeans were 1/4-cent higher at US$10.94 1/2.

 

The export sales should provide some fundamental strength to underpin prices, with a bullish trend and higher crude oil and metal markets providing outside support as well, said Jack Scoville, analyst with Price Futures Group in Chicago.

 

U.S. Department of Agriculture reported weekly soybean export sales were 1.296 million metric tonnes for the week ended Nov. 8. The sales were a marketing year high and double the prior 4-week average, USDA said. The sales were primarily for China with 916,400 metric tonnes, and Japan with 186,200 tonnes. Analysts had forecast sales between 600,000 and 850,000 metric tonnes. Soymeal sales were a net 155,400 tonnes, and soyoil commitments were 29,800 metric tonnes.

 

The trend of the market remains higher, but with the export sales primarily to China, a feature known by the market and traders looking to square up a few positions ahead of next week's U.S. Thanksgiving holiday, upside momentum could be curtailed heading into the weekend, analysts added.

 

USDA also announced Friday private exporters reported new sales of 226,000 metric tonnes of U.S. soybeans to China for delivery in the 2007-08 marketing year.

 

U.S. exporters are required to report to the USDA sales of 100,000 tonnes or more of soybeans made in the same day to the same destination by 3 p.m. ET the next business day, according to the USDA.

 

The market was a bit quiet overnight, but soybeans and soymeal did carve out new contract highs before pulling back near the end of the session, a CBOT floor analyst said.

 

A technical analyst said the next upside price objective for January soybeans is to push and close prices above major psychological resistance at US$11.00 a bushel. The next downside price objective is closing prices below strong support at US$10.49 1/2, which is the bottom of an upside price gap on the daily bar chart.

 

First resistance for January soybeans is seen at Thursday's contract high of US$10.80 1/2 and then at US$10.90. First support is seen at Thursday's low of US$10.70 1/2 and then at US$10.62 1/2.

 

The DTN Meteorlogix Weather Service forecast said wet weather in Brazil's Rio Grande do Sul and Parana states is disrupting planting and may force some replanting. Meanwhile, generally favorable conditions for planting and development are forecast for Mato Grosso.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly lower Friday, amid strong expectations that the government will issue monetary tightening policies over the weekend. The benchmark September 2008 soybean contract settled RMB24 lower at RMB4,540 a metric tonne.

 

Cash soybean prices in China rose sharply in the week to Friday as farmers and traders were reluctant to sell in expectations of higher prices.

 

Crude palm oil futures on Malaysia's derivatives exchange fell Friday, in what traders described as a correction as fundamentals failed to support gains made Thursday and technical selling set in. The benchmark February contract on Bursa Malaysia Derivatives ended MYR34 lower at MYR2,904 a metric tonne.