March 16, 2007

 

CBOT Soy Outlook on Friday: Down 2-3 cents; following through on e-CBOT theme

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session lower, taking its cue from overnight trade amid the absence of fresh fundamental news to direct prices.

 

Soybean futures are called to open 2 to 3 cents lower.

 

In e-CBOT trade, May was 3 1/4 cents lower at US$7.47 1/4 and November soybeans were 2 cents lower at US$7.88.

 

A quiet news front is expected to keep soybeans following through on Thursday's declines, with technical weakness and speculative funds' willingness to trim length pressuring prices in early action, analysts say.

 

The lack of a fundamental spark is keeping futures in a choppy, grinding trend, but light short covering could emerging ahead of Informa Economics acreage projections, a CBOT floor analyst said.

 

Informa is expected to release its 2007 acreage estimates near 10:30 a.m. CDT.

 

Otherwise, the market has few fresh influences with the next major fundamental event not expected until the March 30 U.S. Department of Agriculture prospective plantings and quarterly grain stocks reports, traders added.

 

A technical analyst said a weekly low close on Friday would give the soybean bears better downside technical momentum. Market bulls would regain some fresh upside technical momentum by producing a close above solid chart resistance at this week's high of US$7.70 3/4 basis May futures. The next downside price objective is closing prices below solid support at this month's low of US$7.39 1/2.

 

First resistance for May soybeans is seen at Thursday's high of US$7.58 and then at US$7.65. First support is seen at this week's low of US$7.46 and then at US$7.39 1/2.

 

U.S. Midwest cash soybean basis bids were mostly steady Friday, cash traders said. Spot U.S. cash soybean bids were up 3 cents in Sioux City, IA., down 5 cents in Quincy, Ill, and down 2 cents in St. Louis, MO.

 

The DTN Meteorlogix Weather Service forecast said no significant precipitation is forecast for the western U.S. Midwest through Monday. After that the threat of moderate or heavy precipitation increases significantly. Early indications suggest that this would be rain but this needs to be watched. In the eastern belt, fields will dry out slowly, since temperatures are below normal. Rainfall next week may return wet conditions.

 

Meanwhile, in Brazil wet weather is expected to cover most of the region during a 3-5 day period. Harvest delays for crops appear likely, Meteorlogix reports.

 

In other news, soybean prices in China's major producing regions rose a bit in the week ended Friday, as supply was insufficient due to recent heavy snow. In Harbin, the provincial capital of Heilongjiang province, China's largest soybean growing region, prices of average quality soybeans were around RMB2,900 a metric tonne versus RMB2,860-RMB2,900 a week ago. Prices in the northeastern part of the province rose to RMB2,800-RMB2,820/tonne from around RMB2,800/tonne a week ago.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Friday, following Thursday's declines on the CBOT. Market participants said domestic traders are waiting for more signs to guide their trade as the trend on CBOT is not clear yet. The benchmark September 2007 contract fell RMB16 to settle at RMB3,191 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly lower Friday in lackluster trading amid an absence of fresh fundamental leads and lingering uncertainty about the direction of global markets. The benchmark June contract ended at MYR1,947 a metric tonne, down MYR9 from Thursday.