July 11, 2008


CBOT Soy Outlook on Friday: Up 10-15 cents; outside markets buoy



Soybean futures on the Chicago Board of Trade are seen starting Friday's day session higher, in step with the overnight theme, with the bullish influence of outside markets buoying prices.


CBOT soybean futures are called 10 to 15 cents higher.


Sharp gains in crude oil and gold futures in conjunction with a weaker U.S. dollar are sending supportive signals to market participants, analysts said.


The U.S. Department of Agriculture's supply and demand reports failed to provide any shockers, but did reinforce the market's bullish views heading into the report, a CBOT floor analyst said.


The USDA forecast 2008-09 U.S. soybean ending stocks at 140 million bushels, compared to 175 million in June and the average analyst estimate of 139 million.


The USDA pegged 2007-08 soybean stocks at 125 million, unchanged from in June. The average of analysts' pre-report estimates was 123 million.


"A lot of this is already built into the bean market, so it doesn't mean we surge higher," said Farm Futures analyst Arlan Suderman. "But having this report behind us without any bearish surprises allows the grain and oilseed complex to follow crude oil higher," he added.


"Bean demand shows rationing, but supplies are still too tight for summer, given the USDA's yield cut," said Mike Zuzolo, analyst with Risk Management Commodities. USDA lowered its yield forecast for 2008-09 soybeans by a 1/2 of a bushel per acre to 41.6.


The strength of the outside markets cannot be ignored, and the funds seem poised to reignite Thursday's upward push, a trader said.


A technical analyst said the next upside price objective for November soybeans is to push and close prices above solid resistance at the contract high of US$16.36 3/4 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$15.00.


First resistance for November soybeans is seen at Thursday's high of US$15.90 and then at US$16.00. First support is seen at US$15.60 and then at Thursday's low of US$15.46.


The DTN Meteorlogix Weather forecasts said a favorable weather pattern continues for corn and soybeans in the Midwest region. Hot weather is possible but only for fairly short periods of time. Shower activity will periodically move into the area, sometimes locally heavy and sometimes only light.


Chinese importers booked seven to nine cargoes of soybeans this week, mostly from the U.S. and Brazil, commodity consultancy Shanghai JCI said Friday. Chinese importers didn't purchase any cargoes from Argentina this week due to uncertainty over a strike by farmers there.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Friday on expectations of a favorable U.S. Department of Agriculture report. The benchmark January 2009 soybean contract settled RMB55 higher at RMB5,001 a metric tonne, or up 1.1%, after trading in the RMB4,955-RMB5,059/tonne range.


Crude palm oil futures on Malaysia's derivatives exchange rose 1.8% Friday as investors resorted to fresh buying following gains in soyoil prices, said trade participants. The benchmark September contract on Bursa Malaysia Derivatives ended MYR64 higher at MYR3,575 a metric tonne after reaching an intraday high of MRY3,582.

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