May 19, 2006

 

CBOT Soy Outlook on Friday: Down 1-2 cents; supportive features limited

 

 

Chicago Board of Trade are expected to start Friday's session lower, following the overnight theme, as the absence of supportive features and favorable weather outlooks keep pressure on prices, traders say.

 

Soybeans are called to open 1 to 2 cents lower.

 

In overnight electronic trade, July soybeans were 1/4-cent lower at US$5.97 3/4, July soymeal was unchanged at US$175.30 and July soyoil was 15 points lower at 25.42 cents per pound.

 

The combination of lower metals and a higher U.S. dollar versus other currencies early Friday, beneficial weather forecasts for the Midwest and technical weakness are providing bearish early indicators for the market, said a CBOT commission house broker.

 

The fundamentals of the market remain bearish with burdensome supplies, but the market continues to key off of outside influences and with the potential for speculative buying to emerge on breaks amid inflationary concerns aggressive selling has remained limited, traders add. Nevertheless, weather forecasts look favorable for planting and early emergence heading into next week, and with the nearby July future able to break underlying support levels, traders say futures are poised for a lower start.

 

Technical analysts say a close below solid technical support at US$5.91 in July futures would provide fresh downside technical momentum, while last week's high of US$6.20 is strong overhead resistance for the market to overcome.

 

First resistance for July soybeans is seen at US$6.03 1/2--Thursday's high--and then at US$6.08. First support is seen at US$5.94 1/2--Thursday's low--and then at US$5.91.

 

The DTN Meteorlogix Weather Service forecast said a few light showers are on tap for the western Midwest today, with a chance for scattered showers during the weekend. Rainfall totals are projected at 0.10-0.50 inch, with coverage of 40%-50%. Temperatures should average near to above normal today and Saturday, and near to below normal Sunday.

 

In the eastern Midwest, scattered sprinkles and light showers are forecast for Friday and Saturday, with mainly dry conditions Sunday. Temperatures will average near to below normal Friday and Saturday, and below normal Sunday, Meteorlogix said.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday, cash dealers said. Spot cash soybean bids were down 22 cents in Quincy, Ill., and up 3 cents in Sioux City, IA according to cash sources Friday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Friday in thin trade, tracking Thursday's losses in CBOT soybean futures. The benchmark September 2006 soybean contract settled RMB6 lower at RMB2,648 a metric tonne, after trading between RMB2,641 and RMB2,658/tonne.

 

Meanwhile, soybean prices in China's major producing regions continued to rise this week, with rising soyoil prices lending some support because of fewer imports, analysts said. "Soyoil prices rose RMB40-RMB60 a metric tonne around the country in the week, so soybean prices finally gained some momentum to rise," said Zhang Liwei, a soy analyst at the China National Grain & Oils Information Center.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately lower Friday, weighed down by losses in CBOT soyoil futures and lingering concerns about slow consumer demand. The benchmark August CPO contract ended at MYR1,452 a metric tonne, down MYR6 from Thursday.