August 9, 2007

 

CBOT Soy Outlook on Friday: Seen up following USDA; outside markets eyed

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session firmer, buoyed by supportive U.S. Department of Agriculture data and bullish technical momentum while uncertainty in world equity markets keep traders on edge, analysts said.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

The USDA data is supportive on the surface, with lingering worries over heat and dryness in the southern Midwest and Delta keeping yield uncertainties in play, analysts said. However, traders said uncertainty surrounding the effects of overnight declines in global equity markets could have a definite impact on market activity.

 

USDA reported 2007-08 soybean production at 2.625 billion bushels, unchanged from the July estimate. The USDA estimated 2007-08 soybean ending stocks at 220 million bushels, down 25 million from July, and below the average of estimates at 247 million. The decline was a reflection of reduced carryin supplies from 2006-07.

 

USDA trimmed 2006-07 ending stocks by 25 million bushels to 575 million. Exports were raised 10 million bushels. Crush was raised 15 million bushels reflecting stronger-than-expected domestic soybean meal disappearance and exports, USDA reported.

 

A technical analyst said market bulls have some upside technical momentum on their side heading into Friday morning's USDA report. The next downside price objective for November soybeans is closing prices below solid support at US$8.50. The next upside price objective is pushing prices above solid technical and psychological resistance at US$9.00.

 

First resistance for November soybeans is seen at Thursday's high of US$8.80 1/2 and then at US$8.90. First support is seen at Thursday's low of US$8.70 and then at US$8.64.

 

The DTN Meteorlogix Weather Service forecast said mostly dry conditions are on tap for Friday in the western Midwest. Scattered showers and thunderstorms are seen for southern Minnesota and far northern Iowa on Saturday morning, with dry conditions or just a few light showers on Sunday and Monday. Temperatures will average above to much above normal through Tuesday with highs in the upper 80s to upper 90s Fahrenheit cooling back to more normal levels on Wednesday and Thursday.

 

In the eastern Midwest, mostly dry conditions are seen through Monday, with dry conditions or just a few light showers favoring the north on Tuesday and Wednesday. Temperatures will average above to much above normal through Tuesday with highs in the upper 80s to low 100s Fahrenheit, Meteorlogix forecasts.

 

August soybean deliveries totaled 498 lots. A customer account at Man Professional Clearing was the principal issuer of 219 lots, with a customer account of Astro Div. of UBS Securities the principal stopper of 359 lots. The last trade date assigned was August 9.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended lower Friday as market sentiment was sapped by losses in other key global commodity and financial markets. The benchmark October contract on Bursa Malaysia Derivatives ended at MYR2,515 a metric tonne, down MYR20 from Thursday.

 

Soybean futures traded on the Dalian Commodity Exchange settled mostly higher Friday, helped by rising cash prices. The benchmark May 2008 soybean contract settled RMB5 higher at RMB3,532 a metric tonne.

 

Cash soybean prices in China's major producing regions jumped in the week ended Friday, supported by rising soybean meal prices and weather concerns.