July 6, 2007

 

CBOT Soy Outlook on Friday: Seen higher; weather concerns underpin

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session on firm footing, supported by weather concerns and technically related price strength.

 

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

 

In overnight e-CBOT trading, July soybeans were 3 cents higher at US$8.57 1/2 per bushel, and November was 5 3/4 cents higher at US$8.92 1/4.

 

The market is poised for a higher start, with traders respecting forecasts for warmer, drier longer-term forecasts with a tight projected 2007-08 balance sheet leaving no margin of error for the 2007 US soybean crop, analysts said.

 

The market is also looking ahead to a potentially bullish supply and demand report next week, with higher overnight prices in Malaysian palm oil futures lending strength as well, said Don Roose, president US Commodities in West Des Moines, Iowa.

 

The supportive fundamental outlook remains an underlying bullish theme, with supportive technical momentum expected to keep a floor under prices as well, analysts added.

 

A technical analyst said the market is pausing at higher price levels after recent big gains. This pause is not bearish, but a bullish pennant pattern that has formed on the daily bar chart, he said. The next upside price objective for November soybeans is closing prices above solid technical resistance at the contract high of US$9.03 1/2. The next downside price objective is closing prices below solid support at US$8.75, which is the top of a gap area on the daily bar chart.

 

First resistance for November soybeans is seen at US$8.93 and then at Thursday's high of US$8.95. First support is seen at Thursday's low of US$8.82 and then at US$8.75.

 

The DTN Meteorlogix Weather Service forecast said mainly dry conditions are on tap for the western Midwest Friday and Saturday. There is a chance for a few light showers in northern areas, light or locally moderate showers south, during Sunday. Temperatures will average above normal with highs ranging from the upper 80s to the middle 90s Fahrenheit.

 

In the eastern Midwest, mainly dry conditions are forecast for Friday and Saturday. Dry conditions with possibly a few light showers are on tap in the northwest Sunday. Temperatures will average above normal during this period. The highest temperatures could reach to the middle 90s in western areas for Saturday and Sunday, Meteorlogix forecasts.

 

The U.S. Department of Agriculture reported weekly soybean export sales were 328,400 metric tonnenes for the week ended June 28. Included in the total were sales of 192,100 metric tonnenes for the 2006-07 marketing year. The 2006-07 sales were primarily for Mexico with 91,500 metric tonnenes, and Taiwan with 33,600 tonnenes. Analysts had forecast sales between 125,000 and 275,000 metric tonnenes. Soymeal sales were a net 100,600 tonnenes, and soyoil commitments were 13,600 metric tonnenes.

 

Deliveries notices posted against July soybean futures totaled 3,046 lots. A customer account at Man Professional Clearing issued 878 lots, and stopped 1,175 lots. The last trade date assigned was July 5.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday as gains in other related commodities such as crude oil helped lift the market beyond the key MYR2,500 a metric tonnene barrier. The benchmark September contract ended at MYR2,520 a metric tonnene, up MYR38 from Thursday.

 

Soybean futures traded on the Dalian Commodity Exchange settled slightly lower Friday, pressured by sluggish demand from the feedmeal sector. The benchmark January 2008 soybean contract settled RMB3 lower at RMB3,292 a metric tonnene.

 

Meanwhile, cash soybean prices in China's major producing regions were stable in the week ended Friday, supported by the surge in soybean futures prices at CBOT.