May 5, 2006

 

CBOT Soy Outlook on Friday: Seen firm; e-CBOT, outside market support

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's session on firm footing, taking its cue from overnight action, with the supportive influence of higher outside inflationary markets underpinning prices.

 

Analysts expect soybeans to open 2 to 4 cents per bushel higher.

 

In overnight electronic trade, July soybeans were 4 3/4 cents higher at US$6.08 1/2, July soymeal was US$1.70 higher at US$179.00 and July soyoil was 10 points higher at 25.41 cents per pound.

 

The outside markets, with precious metals and energies trading higher should attract speculative buying to support prices once again, analysts said.

 

A quiet news front is expected to keep attention focused on the outside markets and technicals, with bearish underlying fundamentals remaining a limiting factor to overall upside momentum, traders add. Despite the firm start, analysts expect futures will continue to consolidate, following the week long path of trading within last Friday's wide trading range.

 

Meanwhile, favorable weekend weather outlooks are expected to promote an active seeding pace across the Midwest, with analysts anticipating soybean plantings around 25% complete when the U.S. Department of Agriculture releases its weekly progress reports Monday.

 

Market technicians say recent price action has formed a bullish symmetrical triangle on the July contract's daily bar chart. Symmetrical triangles are continuation patterns, and given that the most recent trend in soybeans was up (from the April low), then technical odds do favor an upside "breakout" from this triangle pattern. It will take a close above solid resistance at last Friday's high of US$6.14 to provide fresh upside technical momentum. A close below the upside gap on Friday--meaning below US$5.91-would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at US$6.09--Thursday's high--and then at US$6.12 1/2-this week's high. First support is seen at US$6.02 1/2--Thursday's low--and then at US$5.98--the top of the upside price gap.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday, cash dealers said. Spot cash soybean bids were up 2 cents in central Ill., up 1 cent in St Louis, MO, and up 1 cent in Evansville, Ind, according to cash sources Friday.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions with only a few light showers are expected in the western Midwest in the next three days. Showers, if any, should be mainly confined to the south and far northern areas. Temperatures will average below normal Friday and Saturday, near to above normal Sunday.

 

In the eastern Midwest, mainly dry conditions are on tap for Friday through Sunday. Temperatures are expected to average below normal, with the lowest readings during this period should be in the 30s Fahrenheit in the northern belt, and low 40s in southern areas, Meteorlogix added.

 

In deliveries, a total of 1,325 delivery notices were posted against the CBOT May soybean contract. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was May 4. A total of 1,414 delivery notices were posted against May soyoil. The house account at Bunge Chicago issued 1,242 lots, with the house account at ADM Investor Services stopping the 470 lots and the house account at Term Commodities stopping 238 lots. The last trade date assigned was May 3.

 

Rotterdam soybeans were mixed and soymeal prices were mostly higher, and European vegoils were steady to lower.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Friday amid range-bound trading as the market waited for clearer leads from next week's export data, traders said. The benchmark July CPO contract ended marginally lower at MYR1,453 a metric tonne, down MYR1 from Thursday, while the nearby May contract ended at MYR1,425/tonne, up MYR4.