June 15, 2007

 

CBOT Soy Outlook on Friday: Up 3-5 cents on e-CBOT, weather uncertainties

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session on firm footing, taking their lead from overnight trade, as weather uncertainties for the Midwest continue to underpin prices, analysts said.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

In overnight e-CBOT trading, July soybeans were 4 1/2 cents higher at US$8.32 per bushel, and November was 4 1/2 cents higher at US$8.65 1/2.

 

Traders are expected to keep and add some risk premium to prices heading into the weekend, as dryness issues for the eastern Midwest remains a market focus, analysts said.

 

There is a possibility of moisture moving through the Midwest crop belt early next week, but with talk of ridging reforming in the region by late next week, sellers will remain hesitant participants, a CBOT floor analyst said. With every bushel counted on in 2007 amid tightening new crop supply outlooks, traders will remain on guard, as you don't add bushels on anticipation of rain, he added.

 

Overnight price strength in Asian palm oil futures is seen aiding soyoil prices and subsequently lending support to soybeans. Nevertheless, overbought conditions and the inability of nearby futures to pierce through overhead chart resistance recently may attract profit taking to create a choppy atmosphere, traders added.

 

A technical analyst said market bulls still have upside momentum and are looking for more on the upside in the near term. The next upside price objective for July soybeans is closing prices above solid technical resistance at Thursday's high and the contract high of US$8.37. The next downside price objective is closing prices below solid support at US$8.00.

 

First resistance for July soybeans is seen at US$8.37 and then at US$8.40. First support is seen at Thursday's low of US$8.26 and then at US$8.20.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions are on tap for the western Midwest Friday. There is a chance for light showers in northern locations, while dryness will persist in central and southern areas into Saturday. Mainly dry weather is forecast for Sunday. Temperatures will average above normal with highs in the 80s and low 90s Fahrenheit during this period. Scattered or widely scattered showers and thundershowers are seen Monday through Wednesday.

 

In the eastern Midwest, dry conditions with only a few light showers in the north are seen for Friday through Sunday. Temperatures will average above normal with highs ranging from the upper 80s to the low 90s F. Dry conditions persist on Monday, with a chance for a few showers developing Tuesday. There appears to be a better chance for scattered showers and thundershowers Wednesday or early Thursday, with temperatures averaging above normal through Wednesday, Meteorlogix said.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday, boosted by strong gains in crude oil prices, higher soyoil futures and lingering concerns about weak production. The benchmark August CPO contract ended at MYR2,425 a metric tonne, up MYR57 from Thursday.

 

On Singapore's Joint Asian Derivatives Exchange, trading activity remained lackluster, with volume totaling 10 lots, traders said.

 

Soybean futures traded on the Dalian Commodity Exchange settled mixed Friday, as market participants await developments at CBOT Friday to guide their trading next week. The benchmark January 2008 soybean contract settled RMB3 higher at RMB3,283 a metric tonne.

 

Meanwhile, cash soybean prices in China's major producing regions were higher in the week ended Friday on declining supplies.