August 31, 2007

 

CBOT Soy Outlook on Friday: Seen 7-10 cents higher on wheat gains, technicals

 

 

Chicago Board of Trade soybean futures are expected to start day session trading 7-to-10 cents higher Friday, supported by spillover from stronger prices overnight, the rally in wheat futures to new all-time highs and supportive technical factors, analysts said.

 

In overnight e-CBOT trading, Sep soybeans rose 9 3/4 cents to US$8.80 1/4 per bushel, and Nov gained 9 cents to US$8.94. E-CBOT volume in November was 6,790 contracts.

 

Soybeans should be supported by the rally in wheat as well as technical strength in Thursday's trade, an analyst said. In overnight trade, December wheat futures settled 20 3/4 cents higher to US$8.05 1/4.

 

On daily technical charts, November soybeans remained above its 50-day moving average Thursday and there are some concerns about the potential for U.S. soybean yields to not reach earlier expectations which is limiting downside momentum, a commission house analyst said. However, it's the last trading day of the month and there could be some position squaring, trimming some of the recent price strength, the commission house analyst said.

 

Warmer and drier weather remains likely during the next 5-to-6 days, helping conditions improve in the northern and western areas of the U.S. Midwest, DTN Meteorlogix Weather said.

 

In the western U.S. Midwest dry weather is forecast Saturday with only a few light showers possible Sunday in northern sections of the region, with dry weather expected on Monday and Tuesday, Meteorlogix Weather said. Temperatures are expected to average above-normal in the period.

 

In the eastern U.S. Midwest mainly dry weather is forecast through the early part of next week with temperatures predicted to average near-to-above normal, Meteorlogix Weather said.

 

In the 6-to-10 day forecast, temperatures are expected to average near-to-above normal and rainfall is forecast to average near-to-above normal north and near-to-below normal south.

 

On daily technical charts, November soybeans closed mid-range after hitting a fresh five-week high, with market bulls gaining upside technical momentum Thursday, a technical analyst said.

 

The bulls' next upside price objective is closing prices above major resistance at US$9.00. The bears' next downside objective is closing prices below solid support at US$8.62.

 

First resistance is seen at US$8.93 1/2, Thursday's high and then at US$9.00. First support is seen at US$8.77, and then at US$8.75.

 

Deliveries posted against the CBOT September soybean future were 1,565 contracts. Large issuers included the customer account of the Astro division of UBS Securities which issued 1,278 contracts and the customer account of R.J. O'Brien, which issued 257 contracts. Large stoppers included the house account of ADM Investor Services, which stopped 753 contracts, and the customer account of Man Professional Clearing, which stopped 225 contracts. The last trade assigned was Aug. 30.

 

In overseas markets, crude palm oil futures were closed in observance of a holiday in Malaysia.

 

Cash soybean prices in China were mostly stable in the week ended Friday underpinned by increased demand for soymeal and limited domestic stocks of soybeans, analysts said.

 

Soybean futures on China's Dalian Commodities Exchange settled higher as increasing demand for soybean meal boosted prices, analysts said. The benchmark May 2008 contract settled RMB54 higher at RMB3,779 per metric tonne.