June 13, 2008

 

CBOT Soy Outlook on Friday: Down 4-6 cents on outside markets, but weather supports

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's day session lower, taking its cue from the overnight theme with weakness in outside markets applying pressure, while Midwest weather continues to support.

 

CBOT soybean futures are called to start the session 4 to 6 cents lower.

 

In overnight electronic trading, July soybeans were 1 3/4 cents lower at US$15.34 3/4 and November soybeans were 6 cents lower at US$15.06 1/2. July soyoil was 9 points lower at 66.11 cents per pound and July soymeal was US$3.80 lower at US$398.40 per short tonne.

 

The combination of a firmer U.S. dollar, lower energy prices and declines in precious metals are expected to attract speculative selling as traders book some profits on recent gains, analysts said.

 

However, downside pressure is seen limited by the market's bullish underlying fundamentals, with tightening stocks and strong demand underpinning prices, analysts added.

 

Meanwhile, new crop futures continue to garner support from crop uncertainties, with Midwest floods raising concerns that many acres could go unseeded, with the replanting of many acres expected to have lower yield potential, a CBOT floor analyst said.

 

Iowa stands at the forefront of market attention, with heavy rains and flooding lowering the states yield potential by 2% to 3% per day, and in the next three weeks soybeans could lose 25% of their yield potential, said Palle Pederson, extension agronomist with Iowa State University.

 

The DTN Meteorlogix weather forecast said a primary cold front will produce thunderstorms through the eastern and southern corn-belt Friday. A secondary cold front could mean more storms for Sunday but the overall coverage with this second front should be less. The long range hints at drier weather in the eastern Midwest while more storms form in the west. The eastern Midwest drier weather depends on a deep eastern USA trough. If this trough is not as deep as indicated it could get wetter in the eastern Midwest sooner, rather than later, Meteorlogix forecasts.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above solid technical resistance at the contract high of US$15.95 3/4 a bushel. The next downside price objective is pushing and closing prices below solid support at US$14.50.

 

First resistance for July soybeans is seen at Thursday's high of US$15.46 3/4 and then at US$15.75. First support is seen at US$15.00 and then at Thursday's low of US$14.92 1/4.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled lower Friday on profit taking, after rising for eight sessions in a row. The benchmark January 2009 soybean contracts settled RMB41 lower at RMB4,966/tonne, or down 0.8%.

 

Chinese importers booked two to three cargoes of soybeans this week from the U.S. and Brazil, according to data from commodity consultancy firm Shanghai JCI Friday. The soybeans are to be delivered in July, August and October, the firm said.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Friday, tracking overnight gains in soyoil and expectations that adverse weather may impact soybean plantings in the U.S., trade participants said. The benchmark August contract on the Bursa Malaysia Derivatives ended MYR67 higher at MYR3,690 a metric tonne.