June 22, 2007

 

CBOT Soy Outlook on Friday: Down 3-4 cents; e-CBOT, near term weather

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session lower, taking their cue from overnight action as favorable near term weather weighs on prices, analyst said.

 

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

 

In overnight e-CBOT trading, July soybeans were 4 cents lower at US$8.14 1/2 per bushel, and November was 3 1/2 cents lower at US$8.48 1/4.

 

Follow through selling from Thursday's declines is expected to set the tone in early action, as rains moving through the central U.S. continue to take some edge off prices, traders said.

 

Prices drifted lower overnight as rains fell in portions of Illinois and Indiana, and with Thursday's losses pulling prices through some chart support, downside movement is the initial order of the day, a CBOT floor analyst said. Spillover weakness from expected losses in neighboring grains is seen applying pressure as well.

 

However, lingering uncertainty tied to longer range forecasts and the ability of prices to hold above critical areas of support beneath the market will limit downside potential, analysts added.

 

A technical analyst said no serious chart damage occurred in Thursday's setback. But the bulls do not want to see a weekly low close on Friday. Market bulls still have a technical advantage with the next upside price objective for November soybeans is closing prices above solid technical resistance at US$8.70. The next downside price objective is closing prices below solid support at US$8.40.

 

First resistance for November soybeans is seen at US$8.60 and then at US$8.70. First support is seen at Thursday's low of US$8.47 1/2 and then at US$8.40.

 

The DTN Meteorlogix Weather Service forecast said Friday's US and European models are in good agreement. The short range continues to feature a slow moving warm frontal disturbance over the Midwest bringing some significant showers and thunderstorms to some dry areas of the eastern Midwest during the next 48 hours. The outlook for next week calls for a ridge to build over the eastern US early next week bringing warmer and drier weather back into the eastern Midwest. However the ridging will break down during the second half of next week as a strong trough drops southward out of eastern Canada into the eastern US.

 

Episodes of scattered showers and thunderstorms will continue during the next 48 hours and maintain very favorable conditions for developing corn and soybeans in the western Midwest. Additional rain is expected next week, Meteorlogix reports.

 

In the eastern Midwest, shower and thundershower activity through Saturday will ease moisture stress to developing corn and soybeans, especially in Illinois and western Indiana with the most rain is expected. Warmer and drier weather the first half of next week will deplete soil moisture, but rains are expected return Thursday, Meteorlogix forecasts.

 

In demand news, Taiwan's Breakfast Soybean Procurement Association, or BSPA, has bought 60,000 metric tonnes of Brazilian soybeans from trading house Mitsui in a tender concluded on Friday, a trader in Taipei said.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended marginally lower on thin volumes Friday as an absence of fresh fundamental developments sapped trading activity. The benchmark September contract ended at MYR2,380 a metric tonne, down MYR8 from Thursday.

 

On Singapore's Joint Asian Derivatives Exchange, volume remained thin at 76 lots. September CPO ended at US$690.00/tonne, down 25 cents from Thursday.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly lower Friday, following losses in CBOT soybeans Thursday. The benchmark January 2008 soybean contract settled RMB39 lower at RMB3,244 a metric tonne.

 

Cash soybean prices in China's major producing regions were slightly higher in the week to Friday, but trading was light due to reduced demand from soy oil processing plants.