August 17, 2007

 

CBOT Soy Outlook on Friday: Steady, firm; eyeing outside markets

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session with a steady to firmer undertone as the market attempts to find stability after Thursday's declines and supportive outside financial market influences.

 

CBOT soybean futures are called to start the session steady to 2 cents higher.

 

In overnight e-CBOT trading, September soybeans were 3/4-cent lower at US$7.98 1/2, and November soybeans were 1 3/4-cent lower at US$8.12 3/4.

 

The market is poised to try and firm up after Thursday's heavy losses, with news of the U.S. Federal Reserve cutting its discount rate providing some strength to outside markets - and that should lend support to grain and oilseed futures, said Jack Scoville, analyst with Price Futures Group.

 

The Fed cut its discount rate 50 basis points to 5.75%, which allows term financing for up to 30 days and is renewable. The Fed said this change will stay in place until liquidity improves.

 

Aside from the movement of outside markets, the trade will continue to focus on weather, as the soybean crop moves through its key pod filling stage of development, analysts added.

 

"The market is projected higher now, but what happens in outside markets by the opening of trade will go a long way in determining where we start," a CBOT floor trader said.

 

A technical analyst said serious chart damage was inflicted Thursday, including the formation of a bearish head-and-shoulders top reversal pattern. The next downside price objective for the bears is closing November prices below solid support at Thursday's low of US$8.04 1/2. The next upside price objective is pushing prices above solid technical resistance at US$8.51 1/2, which would fill on the upside Thursday's downside price gap on the daily chart.

 

First resistance for November soybeans is seen at US$8.25 and then at Thursday's high of US$8.30. First support is seen at Thursday's low of US$8.04 1/2 and then at US$8.00.

 

The DTN Meteorlogix Weather Service forecast said increasing rainfall will continue to favor filling crops in areas from Iowa northward and from northern Illinois northward during the coming days. The crops across the southern portion of the eastern Midwest will continue under some stress due to below normal rainfall and above normal temperatures.

 

In the Delta, dryness and extreme heat this week has greatly increased stress to soybeans. The coming week looks slightly less hot with a few isolated thundershowers possible, Meteorlogix forecasts.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Friday, tracking similar falls on CBOT Thursday. The benchmark May 2008 soybean contract settled RMB48 lower at RMB3,518 a metric tonne.

 

Cash soybean prices in China's major producing regions continued to rise in the week to Friday, supported by reduced supply amid recovering soymeal demand.

 

Crude palm oil futures on Malaysia's derivatives exchange swung sharply Friday, ending slightly lower, but mostly recovering from a new seven-week low touched earlier in the day.