June 6, 2008

CBOT Soy Outlook on Friday: Up 8-10 cents on follow-through momentum

Chicago Board of Trade soybean futures are seen starting Friday's day session higher, following through on Thursday's sharp gains, supported by a plethora of bullish market influences, analysts said.

CBOT soybean futures are called to start the session 8 to 10 cents higher. In overnight electronic trading, July soybeans were 8 1/2 cents higher at US$14.60 1/2, November soybeans were 11 1/2 cents lower at US$14.43 1/2. July soyoil was 73 points higher at 63.38 cents per pound and July soymeal was US$5.20 higher US$378.70 per short tonne.

The combination of higher outside markets, supportive weather forecasts, bullish demand outlooks amid the lingering Argentina farmers' strike and the resurgence of speculative money flowing into the market are seen buoying prices, analysts added.

The impact of surging crude oil futures is expected to keep speculative buying flowing through the commodity sector and with worries that stormy Midwest weather will limit the ability of farmers to plant and replant fields across the central U.S. this next week is seen underpinning prices as well, a CBOT floor broker said.

Strong underlying export demand for soybeans and the soy products due to demand shifting from Argentina is fostering bullish momentum as well, he added. Nevertheless, after posting explosive gains and prices satisfying a near-term objective of breaking out of a two-month trading range, end of the week profit-taking may surface to temper advances heading into the weekend, traders said.

The DTN Meteorlogix weather forecast continues to feature frequent episodes of locally heavy thunderstorms across the U.S. Midwest. These are especially likely for the western and northern areas of the corn-belt. Flooding concerns will continue. The severe weather threat is also quite high, with field work delays quite likely, while the replanting of flooded out fields continues, Meteorlogix added.

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled sharply higher Friday, following a surge at CBOT and crude oil gains overnight. The benchmark January 2009 soybean contract settled RMB157, or 3.4%, higher at RMB4,747/tonne after trading in a narrow range of RMB4,734-RMB4,780/tonne.

Cash soybean prices in China's major producing regions were stable in the week to Friday amid light trading.

Crude palm oil futures on Malaysia's derivatives exchange ended sharply higher at an eight-day high Friday on strong buying as investors took cues from rises in soyoil and crude oil prices. The benchmark August contract on the Bursa Malaysia Derivatives ended MYR72 higher at MYR3,600 a metric tonne.