August 24, 2007

 

CBOT Soy Outlook on Friday: Up 3-5 cents; weather dominating market attention

 

 

Soybean futures on the Chicago Board of Trade are called to open Friday's day session higher, as weather related crop concerns continues to dominate the market, analysts said.

 

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

 

In overnight e-CBOT trading, September soybeans were 5 cents higher at US$8.47, and November soybeans were 4 cents higher at US$8.62 1/4.

 

The floods in the upper Midwest coupled with heat and dryness stress in southern areas remain the catalysts for traders to add risk premiums to prices, analysts said.

 

Solid underlying demand and technically inspired buying are additional factors seen leading soybeans upward, analysts added.

 

However, the rains in many areas are seen benefiting crops in their critical pod filing stage. With rains forecasted to reach some drier areas and cooler temps expected to move into southern areas, pre-weekend profit taking may be feature at some point, a trader said.

 

A technical analyst said the bulls have gained fresh upside technical momentum. The next upside price objective for November soybeans is pushing prices above solid technical resistance at US$8.70. The next downside price objective is closing prices below solid support at US$8.30.

 

First resistance for November soybeans is seen at Thursday's high of US$8.67 and then at US$8.70. First support is seen at US$8.50 and then at US$8.40.

 

The DTN Meteorlogix Weather Service forecast said another day with possible heavy storms and some flooding concerns is on tap for the northern Midwest Friday. This time a little south and east of where it was Thursday. Rain has been added to the forecast for central Illinois and Missouri. In this case, rain would be favorable, since this area did not have the heavy rains of the past week, Meteorlogix reports.

 

In the U.S. Delta, hot, dry weather continues to stress late filling soybeans. There is still some chance for cooler weather late next week, but early indications suggest that this cooler weather will come without much rainfall, Meteorlogix said.

 

Crop scouts from the western and eastern legs of the John Deere/Pro Farmer U.S Midwest crop tour met Thursday evening in Owatonna, Minnesota to discuss their observations. Minnesota's estimated soybean pod counts were below the level seen in 2006. Average soybean pod counts in a three-foot square area from 119 samples evaluated were 1,030.10, below the 1,091.01 observed in 2006.

 

Iowa's soybean pod counts are described as only average. Pro Farmer estimated Iowa's total soybean pod count at 1,218.40 in a three-foot square area, down about 5% to 6% from last year's tour.

 

Pro Farmer will issue its total Midwest corn yield and average soybean pod count on Friday at 2:30 p.m. EDT.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Friday, supported by increasing soybean cash prices. The benchmark May 2008 soybean contract settled RMB16 higher at RMB3,653 a metric tonne.

 

Cash soybean prices in China's major producing regions continued to rise in the week to Friday, on tight soybean stocks and rising freight fees. Crude palm oil futures on Malaysia's derivatives exchange ended flat amid choppy trade Friday, as the market sought direction and speculated over upcoming export data, trade participants said.

 

The benchmark November contract at the Bursa Malaysia Derivative Exchange Friday ended at MYR2,430/tonne, unchanged from the previous close.