July 20, 2007

 

CBOT Soy Outlook on Friday: 4-6 cents higher on supportive weather forecasts

 

 

Chicago Board of Trade soybean futures are predicted to begin trading 4 to 6 cents higher Friday, underpinned by forecasts for drier and hotter weather in the U.S. expected for much of the rest of the month and firm prices in overnight activity, analysts said.

 

In overnight e-CBOT trading, August soybeans gained 6 1/2 cents to US$8.62 1/2 per bushel, September rose 7 1/4 cents to US$8.72 and November gained 5 3/4 cents to US$8.87 3/4. E-CBOT volume in November was 4,404 contracts.

 

The weather forecasts and the firm prices overnight should provide support to soybeans, a commission house analyst said. However the market will wait on the midday weather outlooks to confirm the overnight forecasts, he added.

 

The market has had some pretty good sized losses recently and could see some position squaring ahead of the weekend, an analyst said. The U.S. Midwest received some good rain this week but soybean yields are determined by August weather, the analyst added.

 

Participants will be cautious ahead of weekend weather forecasts as the actual weather has been volatile in relation to the forecasts, a trader added

 

Major weather forecasting models are in fair agreement over the next five days but conflict in their longer term outlooks, DTN Meteorologix Weather said.

 

In the western U.S. Midwest, mainly dry weather is predicted through Sunday DTN Meteorologix Weather said, with temperatures expected to average near-to-below normal Saturday and near-to-above normal Sunday. Mainly dry weather is expected Monday with above normal temperatures expected west.

 

In the eastern U.S. Midwest, dry weather is expected through Monday with temperatures averaging below normal, Meteorologix Weather said.

 

In the 6-to-10 day outlook, temperatures are expected to average near-to-above normal. Rainfall is expected to average near-to-below normal, with near-normal amounts likely in the east and below-normal amounts likely in the west.

 

On daily technical charts, November soybeans closed near session highs on weather outlooks calling for heat and dry weather extending through the rest of the month, a technical analyst said. Still, serious near-term chart damage has occurred to suggest a major market top is in place. Daily charts show what could be the early stages of a bear flag or bearish pennant pattern forming, the analyst said. The bulls' next upside price objective is closing prices above solid technical resistance at US$8.93. The bears' next downside objective is closing prices below solid support at US$8.55 1/2.

 

First resistance is seen at US$8.88, Thursday's high and then at US$8.93. First support is seen at US$8.75 and then at US$8.69.

 

In overseas markets, crude palm oil futures settled higher on Malaysia's derivatives exchange Friday with the benchmark contract up MYR21 at MYR2,506 per metric tonne.

 

On Singapore's Joint Asian Derivatives Exchange, CPO futures were higher with the November contract up US$6 at US$731/tonne at 1000 GMT. Total volume was 51 contracts.

 

Soybean futures on China's Dalian Commodities Exchange settled firm. The benchmark January 2008 contract finished higher at RMB11 at RMB3,309 per metric tonne.