August 28, 2009

 

CBOT Soy Outlook on Friday: Up on tight supply, new crop uncertainty

 

 

Tight availability of nearby supplies coupled with the uncertainty of new crop potential is expected to promote a firm start in Chicago Board of Trade soybean futures on Friday.

 

CBOT soybean futures are seen opening 10 cents to 20 cents higher.

 

The spot month bean and meal contracts are the upside leaders of price strength, as strong cash and futures markets attempt to get old crop supplies into the cash pipeline, analysts said.

 

Deferred months are expected to firm as well, but the sustainability of there strength is questionable due to the uncertainty of new crop production.

 

"New crop production has the potential for "two extremes" with a September frost opening the door for yield losses, while an absence of freezing temperatures into October could produce record output," said Victor Lespinasse, analyst with Grainsanalyst.com.

 

The scenario has kept price action choppy in new crop futures during the 3 previous trading days. Meanwhile, fresh export demand continues to underpin prices.

 

Adding support to the market is a lack of bearish influences from outside financial markets, with higher crude oil futures, strength in equities and slightly lower U.S. dollar aiding the higher theme.

 

In demand news, U.S. Department of Agriculture announced private export sales of 110,000 metric tonnes of soybeans for delivery to China in the 2009-10 marketing year Friday.

 

A technical analyst said first resistance for November soybeans is seen at Thursday's high of SU$10.03 1/2 and then at this week's high of SU$10.16. First support is seen at Thursday's low of SU$9.89 1/4 and then at this week's low of SU$9.83.

 

The T-storm Weather forecast said scattered showers and localized areas of heavy rain continues across central and eastern soybean areas of the Midwest through Friday night. A much cooler weather pattern begins Saturday through Tuesday. No frost is on tap, with warmer weather gradually returning to the Midwest during the second half of next week, T-storm Weather forecasts.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Friday on stronger crude oil prices and a weaker dollar overnight, despite falling local equities and a mixed performance on CBOT Thursday. The benchmark May 2010 soybean contract settled RMB22 a metric tonne higher at RMB3,728/tonne.

 

Cash soybean prices in China's major producing areas were mostly stable in the week to Friday as more processors suspended production due to limited supply.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Friday in line with commodity and regional stock markets, with support from likely tightness in palm oil supplies. The benchmark November CPO contract on the Bursa Malaysia Derivatives ended MYR20 higher at MYR2,366 a metric tonne.