June 16, 2006

 

CBOT Soy Outlook on Friday: Up 4-6 cents; outside markets, weather concerns

 

 

Chicago Board of Trade soybean futures are expected to start open outcry trading higher Friday, extending the positive tone from the overnight session amid supportive pre-opening indicators from outside markets and weather uncertainties.

 

Soybeans are called to open 4 to 6 cents higher.

 

In overnight electronic trade, July soybeans were 5 1/2-cents higher at US$5.98, July soymeal was US$1.40 higher at US$180.50 and July soyoil was 13 points higher at 24.95 cents per pound.

 

The uncertainty over weather in the Midwest heading into the weekend with heat and scattered showers forecast, coupled with strength in outside metals markets, should provide a spark to lift prices in early action, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The trade is a bit concerned over varied rain potential across the crop belt and with smaller acreage forecasts, traders are content to keep a bit of risk premium in the market, Roose added.

 

Traders say the market still has a positive attitude from lower private acreage estimates, but despite the gains, the market remains range bound hovering in sideways volatile trade, analysts add.

 

Technical analysts say prices are still in a choppy trading range on the daily bar chart. The next upside price objective for the July contract is closing prices above this month's high of US$6.11. A close back below technical support at this month's low of US$5.75 1/2 would provide fresh downside technical momentum.

 

First resistance for July soybeans is seen at US$5.98--Thursday's high--and then at US$6.00. First support is seen at US$5.91--Thursday's low--and then at US$5.89--this week's low.

 

The DTN Meteorlogix Weather Service forecast said Friday's weather models are in better agreement, with weak upper level ridging forming early next week, over the central plains and western Midwest. Later next week this ridge is expected to shift westward again as the jet stream dips southward over the Great Lakes region and the Midwest.

 

Scattered thunderstorms Friday and Saturday should be heaviest in the driest areas of the western Midwest, helping to ease soil moisture deficit concerns somewhat. However, more rain will still be needed, Meteorlogix said. In the eastern Midwest, corn and soybean development will benefit from the warm to hot weather during Friday and Saturday, and scattered showers later in the period will also be favorable, Meteorlogix adds

 

In news, South Korea's CJ Corp. bought 55,000 metric tonnes of Brazil-origin soybeans for July-August delivery, a trader in Seoul said Friday.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday, cash dealers said. Spot cash soybean bids were up 3 cents in Champaign, Ill., up 2 cents in Decatur, Ind., and up 3 cents in St Louis, Mo., according to cash sources Friday.

 

Rotterdam soybeans and soymeal prices were higher. European vegoils were mixed.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Friday, tracking overnight gains in Chicago Board of Trade soybean futures. The benchmark September 2006 soybean contract rose RMB5 to settle at RMB2,623 a metric tonne, after trading between RMB2,619/tonne and RMB2,629/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower after a listless trading day Friday as participants waited for fresh leads. The benchmark September CPO contract ended at MYR1,464 a metric tonne, down MYR1 from Thursday.