November 23, 2007

 

CBOT Soy Outlook on Friday: Up 6-8 cents on demand, outside market drivers

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session higher, buoyed by another week of strong demand and outside influences.

 

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

 

In overnight e-CBOT trading, January soybeans were 7 1/4 cents higher at US$10.91 1/4 per bushel, and March soybeans were 7 cents higher at US$11.08 1/4.

 

The world perspective on demand continues to outstrip supply, and with the driving forces of the weak U.S. dollar and new highs in Malaysian palm oil overnight, futures are poised for a firm start, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

However, traders will take a somewhat cautious approach to upside moves as they factor in how much of the large weekly export sales total was priced in the market already, Roose said. In addition, crude oil futures are lower in early trade, and that may serve as an anchor to balance out upside moves, he added.

 

With many participants on the sidelines because of an early closing Friday after the Thanksgiving holiday, price action could turn volatile, with price moves exaggerated as large orders could easily push prices in thin holiday trade, a CBOT floor trader said.

 

Nevertheless, bullish momentum continues to flow through the soy complex amid supportive longer-term fundamentals, analysts said.

 

CBOT grains and oilseed futures close at 1 p.m. EST Friday.

 

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$10.62 1/4, which is the bottom of an upside price gap on the daily bar chart.

 

First resistance for January soybeans is seen at the contract high of US$10.88 and then at US$11.00. First support is seen at Wednesday's low of US$10.78 1/2 and then at this week's low of US$10.70.

 

The U.S. Department of Agriculture reported weekly soybean export sales were 1,807,600 metric tonnes for the week ended Nov. 15. The sales were a marketing year high and 2 1/3 times the prior four-week average, the USDA said. The sales were primarily for China with 1,196,200 metric tonnes, and unknown destinations with 293,600 tonnes. Soymeal sales were a net 134,100 tonnes. Soyoil commitments were 65,200 metric tonnes. The sales were primarily to unknown destinations with 56,300 tonnes. Analysts had forecast sales between 30,000 and 80,000 metric tonnes.

 

The DTN Meteorlogix Weather Service said rainfall combined with warm temperatures will favor developing summer crops in Brazil, while slowing the planting effort at times.

 

In overseas markets, crude palm oil futures traded on Malaysia's derivatives exchange ended higher Friday, breaking records for both intraday and closing highs. Traders said a rise in Malaysian palm oil exports despite high prices, firm crude oil prices and a rise in soyoil prices during Asian trading hours contributed to the rise in crude palm oil futures. The benchmark February contract on Bursa Malaysia Derivatives moved in a narrow range in morning session but gained fresh momentum in afternoon to end MYR52 higher at a record intraday high of MYR3,044 a metric tonne.

 

Soybean futures traded on the Dalian Commodity Exchange extended gains to settle higher Friday amid a lack of clearer trading direction. The benchmark September 2008 soybean contract settled RMB20 higher at 4,427 a metric tonne.

 

Cash soybean prices in China were mixed in the week to Friday, with farmers reluctant to sell but some processing plants suspending purchases on expectations market supplies will increase.