June 13, 2007

 

CBOT Soy Outlook on Wednesday: Down 7-10 cents on weather forecast, spillover

 

 

Chicago Board of Trade soybean futures are expected to start trading 7-to-10 cents lower Wednesday as some weather forecasts predict an increased chance of rain later this week and into next week and spillover from lower prices overnight are expected to pressure prices at the opening, analysts said.

 

In overnight e-CBOT trading, July soybeans fell 9 3/4 cents to US$8.16 3/4 per bushel, August declined 9 1/4 cents to US$8.25 and November fell 10 3/4 cents to US$8.49 1/2. E-CBOT volume in July was 3,801 contracts.

 

Soybeans should come under pressure on follow through weakness from the overnight session, with some forecasts indicating the potential for rain this weekend and into the early part of next week in eastern sections of the U.S. Midwest, an analyst said.

 

In addition, Palm oil futures were sharply lower in overnight trade and soyoil should come under pressure, he added.

 

The market remains extremely sensitive to the weather and will react to any changes in the outlooks, a floor trader said. Last night the forecast changed and the markets reacted, he said.

 

Near term weather forecasts remain hot and dry in much of the U.S. Midwest but disagree in the 6-to-10 day forecast, DTN Meteorologix Weather said. One model has the eastern U.S. Midwest remaining mostly dry while the other predicts cooler temperatures and rain for the eastern part of the region.

 

In the near-term outlook, the western U.S. Midwest is expected to have scattered showers and thundershowers are forecast Wednesday and Thursday with rainfall potential 0.30-1.50 inches and locally heavier in South Dakota, Nebraska, and western and northern Minnesota with dry weather expected across the region on Friday, DTN Meteorologix Weather said. Temperatures are expected to average above normal through Thursday and Friday.

 

In the eastern U.S. Midwest, mainly dry weather is expected through Friday with temperatures are expected to average above normal with highs mostly in the upper 80's to low 90 degrees Fahrenheit.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-above normal. Rainfall is expected to average near-to-below normal Meteorologix Weather said.

 

On day session open auction technical charts, July soybeans closed near mid-range and were pressured by light profit taking, a technical analyst said. The bulls have upside momentum with their next price objective closing prices above solid technical resistance at the contract high of US$8.37. The bears' next downside objective is closing prices below solid support at US$8.00, the analyst said.

 

First resistance is seen at US$8.32 and then at US$8.37. First support is seen at this week's low of US$8.22 1/2 and then at US$8.15.

 

In overseas markets, palm oil futures settled lower with benchmark August contract down MYR83 at MYR2,350 per metric tonne.

 

Soybean futures on China's Dalian Commodities Exchange settled lower on ample supply and slack demand from the feedmeal sector, analysts said. The benchmark January 2008 contract ended down RMB45 at RMB3,262 per metric tonne.