June 21, 2007

 

CBOT Soy Outlook on Thursday: Up 3-4 cents on longer range weather outlooks

 

 

Chicago Board of Trade soybean futures are seen starting Thursday's day session firmer, in tune with overnight trade, as the market continues to focus on supportive longer range weather outlooks.

 

CBOT soybean futures are called to start the session 3 to 4 cents higher.

 

In overnight e-CBOT trading, July soybeans were 4 1/4 cents higher at US$8.43 1/4 per bushel, and November was 3 1/2 cents higher at US$8.78.

 

Supportive longer range weather forecasts projecting a return of ridging to dry areas of the eastern Midwest after scattered showers move through the area this week are expected to keep prices underpinned, analysts said.

 

With the critical growth stages for soybeans still weeks away and near term rains spotty and uncertain in the eastern belt, traders are taking a cautious approach choosing keep risk premium in prices, a CBOT floor analyst said.

 

A quiet news front will keep attention on weather, but traders are expected to remain on guard for short term corrections if weather outlooks shift. Speculative interest in the market will continue to promote volatile action, with price moves in neighboring grains seen influencing direction, a CBOT trader added.

 

A technical analyst said market bulls still have the technical advantage. The next upside price objective for November soybeans is closing prices above solid technical resistance at the contract high of US$8.93. The next downside price objective is closing prices below solid support at US$8.50.

 

First resistance for November soybeans is seen at US$8.80 and then at Wednesday's high of US$8.86. First support is seen at Wednesday's low of US$8.67 1/2 and then at US$8.60.

 

The DTN Meteorlogix Weather Service forecast said US and European models are in fair to good agreement. The short range continues to feature an upper level disturbance forming over the northern plains today and tracking east-southeast through the Midwest region Friday and Saturday. This will be the focus for developing thunderstorms. A ridge center forms over the eastern Midwest later this weekend and early next week, Meteorlogix reports.

 

Thundershowers during the next 2 days should help maintain soil moisture for developing crops in the western Midwest. In the eastern Midwest, shower and thundershower activity Friday through Saturday will help to ease stress to developing crops and the heaviest of this rain will recharge soil moisture in some locations. However, there is some chance that parts of the east may miss this rain, Meteorlogix forecasts.

 

U.S. Department of Agriculture reported weekly soybean export sales were 362,400 metric tonnes for the week ended June 14. 2006-07 marketing year sales totaled 359,300 metric tonnes. The primary buyers were Mexico with 107,700 metric tonnes, Japan with 77,500 tonnes and China with 50,600 tonnes. Analysts had forecast sales between 100,000 and 300,000 metric tonnes. Soymeal sales were a net 57,800 tonnes, and soyoil commitments were 20,600 metric tonnes.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Thursday after a choppy trading day and an uncertain supply and demand outlook prompted most market participants to take a cautious approach. The benchmark September contract ended up MYR11 at MYR2,388 a metric tonne.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly higher Thursday, following Wednesday's gains in CBOT soybean futures. The benchmark January 2008 soybean contract settled RMB10 higher at RMB3,283 a metric tonne.