May 18, 2007

 

CBOT Soy Outlook on Friday: Up 1-2 cents, influenced by higher e-CBOT trade

 

 

Soybean futures on the Chicago Board of Trade are expected to start Friday's session with modest gains, influenced by overnight price action.

 

CBOT soybean futures are called to start the session 1 to 2 cents higher.

 

In overnight e-CBOT trading, July soybeans were 3/4-cent higher at US$7.93 1/4 per bushel, and November were 1/4-cent higher at US$8.21 1/2.

 

Light price gains overnight have soybeans poised for a slightly higher start, with bullish chart signals and lingering uncertainty surrounding the 2007 U.S. soy crop keeping a floor under prices, analysts said.

 

However, end of the week positioning is seen producing a choppy, two-sided theme similar to Thursday's price action, traders said.

 

The market is overbought and overdue for a correction, but with bullish new crop fundamental outlooks, traders will remain leery of pressing prices lower, closely watching if speculative funds continue to underpin prices, a CBOT floor analyst said.

 

Worries over tightening new crop inventories, strength in world vegoil markets and the need to entice Brazilian farmers into planting more soy acres in the next crop year should keep this market firmly underpinned, he added.

 

A technical analyst said market bulls still have solid upside technical momentum on their side. However, the market is still short-term overbought, technically, and due for a downside "correction" soon. The next upside price objective for July soybeans is closing prices above major psychological resistance at US$8.00. The next downside price objective is closing prices below solid support at US$7.60.

 

First resistance for July soybeans is seen at Thursday's high of US$7.96 1/2 and then at US$8.00. First support is seen at Thursday's low of US$7.88 3/4 and then at US$7.85.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions are on tap for the western Midwest Friday and Saturday. Dry conditions or with only a few light showers in the northern areas are seen for Sunday. Temperatures will average near to above normal Friday, above normal Saturday, and near normal in northern areas and above normal in southern areas Sunday. Only a few late afternoon showers are possible Monday.

 

In the eastern Midwest, mainly dry weather is seen for Friday and Saturday. Dry conditions with possibly only a few light showers in northern areas are forecasted for Sunday. Temperatures will average below normal Friday, near to above normal in western areas and below normal in eastern areas Saturday and Sunday. A dry outlook is seen for Monday and Tuesday, Meteorlogix reports.

 

In overseas markets, cash soybean prices in China's major producing regions were largely stable in the week ended Friday, but soymeal and soyoil prices were higher.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Friday, as the market waited for more cues to guide trading. The benchmark September 2007 contract settled RMB12 lower at RMB3,222 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Friday, lifted by rising prices of rival crude oil and soyoil. The benchmark August CPO contract ended at MYR2370 a metric tonne, up MYR37 from Thursday's close, after coming off an intraday high of MYR2,382/tonne.