August 4, 2006

 

CBOT Soy Outlook on Friday: Up 3-5 cents; adding weather premium

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's day session on firm footing, adding weather premium amid warmer and drier long range morning forecasts.

 

Soybeans are called to open 3 to 5 cents higher.

 

In e-CBOT trade, November soybeans were 5 cents higher at US$6.00 1/2 per bushel.

 

The 6-10 day and 11-14 day Midwest weather forecasts are projecting above normal temps and below normal rains, and that should promote some upside movement, as weather remains the dictator of price direction at this point, said Jason Roose, analyst with U.S. Commodities.

 

However, higher than expected private crop estimates from Informa Economics will temper some bullish thoughts, possibly limiting upward mobility, Roose added.

 

Nevertheless, the market is poised to add some risk premium heading into the weekend amid conflicting long range weather models, and with futures hovering above long term technical support, prices remain firmly underpinned, said a CBOT commission house broker.

 

Technical analysts said November futures are still in the lower portion of a wide trading range over the past six months. There is a very strong technical support zone located between US$5.85 and US$5.92. The next downside price objective for the market is closing November below solid support at the June low of US$5.91. It will take a close above technical resistance at US$6.10 to provide fresh upside technical momentum.

 

First resistance for November soybeans is seen at US$5.98--Thursday's high-and then at US$6.00. First support is seen at US$5.94--Thursday's low--and then at US$5.91.

 

Private analytical firm Informa Economics estimated 2006-07 U.S. corn production at 10.857 billion bushels, with a yield of 150.8 bushels per acre, and estimated U.S. 2006-07 soybean production at 3.072 billion bushels with a yield of 41.5 bushels per acre sources said Friday. In the July supply and demand report, the U.S. Department of Agriculture estimated U.S. corn production at 10.740 billion bushels with a trend line yield of 149 bushels per acre. Soybean production was estimated at 3.010 billion bushels and a trend line yield of 40.7 bushels per acre.

 

The DTN Meteorlogix forecast said Friday's US and European models are not in very good agreement. Both models agree in building the subtropical ridge back into the central US from its current position but disagree over the length of time the ridge will last in the central U.S.

 

Meteorlogix forecasts the western Midwest projects a return to above normal temperatures and below normal rainfall during the next 7-10 days will deplete soil moisture and increase stress on filling corn and soybeans in the western Midwest. In the eastern belt, mostly above normal temperatures and below normal rainfall is expected during the next 7-10 days, depleting soil moisture and increasing stress on filling corn and soybeans especially in some of the drier areas of western Illinois, Meteorlogix reported.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday. Spot cash soybean bids were down 1-cent in Keokuk IA, up 3 cents in Peoria Ill, up 7-cent in Frankfort, Ind., and down 1-cent in St. Louis Mo, according to cash sources Friday.

 

In deliveries, a total of 1,343 delivery notices recirculated against the August soybean future. The last trade date assigned was August 3. 598 delivery notices recirculated against the August soymeal contract. The trade date assigned was August 3. August soyoil delivery intentions totaled 56 lots. The house account at ADM Investor Services stopped 46 lots. The last trade date assigned was August 2.

 

Meanwhile, the National Grain and Oil Information Center, a major government backed think-tank in China's agricultural sector, said that the country's soybean production for 2006 is expected to drop 2.7% to 15.9 million metric tonnes Friday.

 

Rotterdam soybeans were mostly lower and soymeal prices were mostly higher. European vegoils were steady to lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher on an upward correction, an analyst said. The benchmark September contract settled RMB1 higher at RMB2,416/tonne, after trading between RMB2,405 and RMB2,429/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower for a third straight day Friday amid continued profit-taking from an earlier rally that some participants considered overdone. The benchmark October contract ended at MYR1,611 a metric tonne, down MYR30 from Thursday.