June 12, 2009

Chicago Board of Trade soy futures are expected to start Friday's day session on the defensive, pressured by strength in the U.S. dollar.

 

CBOT soy futures are seen opening 4 cents to 6 cents lower.

 

"The stronger dollar caused commodities to crumble overnight, and that should carry over into day session activity with traders taking some profits off the table following recent gains," said Don Roose, president of U.S. Commodities.

 

The market, however, has not proved that demand for tight old crop stocks has been rationed, and until traders are convinced the new crop will fare well despite a late finish to plantings, prices will remain underpinned, Roose added.

 

Otherwise, technically inspired activity and spreading will remain featured attractions with traders keeping a close eye on weather conditions, as the market makes the transition from plantings to crop conditions and development, a CBOT floor broker said.

 

A technical analyst said first resistance for July soy is seen at US$12.75 and then at Thursday's high of US$12.91 1/4. First support is seen at Thursday's low of US$12.48 1/4 and then at US$12.37 1/2.

 

The July/November bull spread settled at US$1.77 1/4 a bushel on Thursday, up from Wednesday's settlement of US$1.66 3/4 cents.

 

DTN Meteorlogix said episodes of scattered showers will favor developing crops in the western and northern Midwest. However, scattered rains throughout southeastern Midwest areas will continue to slow late spring field work.

 

In overseas markets, soy futures traded on the Dalian Commodity Exchange settled marginally lower Friday, ignoring fresh multi-month highs in CBOT counterparts. The benchmark January 2010 soy contract settled 0.2% lower at RMB3,710 a metric tonne.

 

Cash soy prices in China's major producing areas rose slightly in the week to Friday, helped by gains in the overseas futures market and a supply shortage due to government buying and the end of destocking at local vegetable oil plants.

 

Chinese soymeal crushers facing storage constraints are likely to significantly increase exports in coming months in a bid to reduce stockpiles built up on high soy imports and weak domestic demand for animal feed, market observers said Friday.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Friday tracking losses in soy oil futures in after-hours trade and late selling as participants rushed to square off positions ahead of the weekend. The benchmark August CPO contract on the Bursa Malaysia Derivatives ended MYR20 down at MYR2,465 a metric tonne.