August 18, 2006

 

CBOT Soy Outlook on Friday: Steady, mixed; following e-CBOT theme

 

 

Traders at the Chicago Board of Trade say opening indicators are pointing to a steady to mixed start to Friday's day session soybean trade.

 

A flat to weaker overnight theme, coupled with the market's reluctance to put in a bottom amid rising yield and production forecasts based on August weather is promoting the early tone, analysts say.

 

Soybeans are called to open steady to mixed.

 

In e-CBOT trade, November soybeans were 3/4-cent lower at US$5.63 3/4 per bushel.

 

The market continues to focus on the usual list of influences, with oversold market conditions and a pickup in demand seen providing underlying support. However, the trade has failed to generate upside momentum previously, as traders remain leery of pushing upside movement amid the uncertainty of speculative fund actions, with bearish crop outlooks and abundant world supplies casting a negative cloud over the market, traders added.

 

A choppy tone is expected, with recent weather conditions initially seen as beneficial to crops, but soybeans are a crop sunshine and prolonged exposure to cooler and wet conditions are starting to raise fears of disease, said U.S. Commodities' Don Roose. It's beginning to be a case of "to much of a good thing," and with a lot of cloud cover this week, Monday's crop ratings maybe more steady, as soybeans grow by sunlight, Roose added.

 

A market technician said the next downside price objective for November soybeans is solid technical support at US$5.50. It will take a close above technical resistance at US$5.80 to begin to provide some fresh upside technical momentum.

 

First resistance for November soybeans is seen at US$5.66 1/2 - Thursday's high - and then at US$5.70. First support is seen at US$5.61 - Thursday's and this week's low - and then at US$5.55.

 

The DTN Meteorlogix forecast said scattered showers and thundershowers, producing rain totals of 0.25-1.00 inch and locally heavier are on tap for the western Midwest Friday. The showers may linger into early Saturday, before turning dry into Sunday. Temperatures will average near to below normal Friday and Saturday, and near to above normal Sunday, Meteorlogix forecasts.

 

In the eastern Midwest, scattered showers and thundershowers are expected Friday and Saturday, with mainly dry conditions Sunday. Temperatures will average near to above normal Friday and Saturday, and near to below normal Sunday, Meteorlogix reports.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday. Spot cash soybean bids were down 1 cent in Des Moines Iowa, down 2 cents in Peoria, Illinois, and down 3 cents in St. Louis, according to cash sources Friday.

 

Rotterdam soybeans were mostly lower and soymeal prices were flat to mixed. European vegoils were lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Friday on increased freight costs, which pushed up prices of imported soybeans, analysts said. The most active January 2007 contract settled RMB25 higher at RMB2,560 a metric tonne, after trading between RMB2,540 and RMB2,577/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Friday, supported by short covering ahead of the weekend after a choppy trading day. The benchmark November contract ended at MYR1,592 a metric tonne, up MYR6 from Thursday.