December 26, 2008
CBOT Soy Outlook on Friday: Up 3-6 cents; technicals, fundamentals support
Chicago Board of Trade soybean futures are expected to start Friday's session firm, supported by strong technicals and fundamental support.
CBOT soybean futures are called 3 cents to 6 cents higher.
Follow through buying from Wednesday's strong close should underpin prices initially, as the path of least resistance remains higher, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.
Fundamentally, the big drivers of the market remain dryness issues in South America and Chinese demand, Roose added.
Despite signs of the market decoupling from outside market factors, higher crude oil futures and weakness in the U.S. dollar is expected to aide the higher theme.
Nevertheless, South American weather forecasts are a little drier than Wednesday and China was reported to have booked some U.S. soybeans keeping fundamentals a dominant influence, analysts added.
Otherwise, fresh news is limited with soybean weekly export sales were within trade estimates.
A technical analyst said the next upside price objective for March soybeans is to push and close prices above solid technical resistance at US$9.62 1/4 a bushel. The next downside price objective is pushing and closing prices below solid technical support at this week's low of US$8.66 1/2 a bushel.
First resistance for March soybeans is seen at Wednesday's high of US$9.20 1/4 and then at US$9.29 3/4. First support is seen at US$9.00 and then at US$8.81 3/4.
The DTN Meteorlogix weather forecast said Argentina's soybean crops will come under some stress due to less than ideal rainfall and higher than normal temperatures during the next 5-7 days. Friday's long range charts covering the 8 to 10 day period suggest the South America ridge will be strongest over western Argentina and the eastern Pacific. Should this verify it would mean dry and hot conditions for Argentina's central agricultural belt.
In Brazil, no significant shower activity is seen for Rio Grande do Sul or southern Parana during the next six days with temperatures near to above normal will increasing stress to developing crops. Long-range charts beyond day six are more promising for at least some rain activity, but this is somewhat uncertain, Meteorlogix added.
U.S. Department of Agriculture reported total weekly soybean export sales were a net 590,900 metric tonnes for the week ended Dec. 18. Sales for 2008-09 were a net 584,800 metric tonnes. Analysts had forecast sales between 500,000 and 750,000 metric tonnes. The primary buyer was China with 374,400 metric tonnes. Soymeal sales were a net 145,700 tonnes, above trade estimates ranging from 50,000 to 100,000 tonnes. Soyoil commitments were a net 5,400 metric tonnes. Analysts had forecast sales between zero and 10,000 tonnes.
In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled little changed Friday, as the market lacked guidance from its bigger counterpart - CBOT - that was closed for Christmas. The benchmark May 2009 soybean contract settled RMB1 lower at RMB3,286 a tonne.
Crude palm oil futures on Malaysia's derivatives exchange ended almost 2% higher Friday, extending gains on support from strong exports to India and the U.S., said trade participants. The benchmark March contract on Bursa Malaysia Derivatives ended MYR31 higher at MYR1,590 a metric tonne, close to the intraday high of MYR1,596.