September 14, 2007

 

CBOT Soy Outlook on Friday: Up 2-4 cents; frost concerns, technical strength

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session higher, garnering support from frost concerns for the northern Midwest and underlying technical strength.

 

CBOT soybean futures are called to start the session 2 to 4 cents higher.

 

In overnight e-CBOT trading, November soybeans were 3 3/4 cents higher at US$9.45, and January soybeans were 3 3/4 cents higher at US$9.60.

 

The market should receive a little support from frost concerns for the upper Midwest, with technical strength, higher palm oil futures, and the market's need to sustain higher prices to attract South American acreage supportive underlying themes, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

However, after rallying to new highs Wednesday, consolidation may remain a feature to limit upside potential, with cold conditions not seen causing any significant damage, and the weight of the upcoming harvest expected to stymie some bullish buys at higher levels, analysts added.

 

The upward push may be a short-lived theme Friday, with rains in the southeast U.S. aiding late maturing soybeans and a lower than expected crush figure taking a little edge off the bullish theme heading into the weekend, Roose added.

 

A technical analyst said the contract high of US$9.59 1/2 basis the November future is strong overhead technical resistance for the market to overcome. The next downside price objective is closing prices below psychological support at US$9.00.

 

First resistance for November soybeans is seen at Thursday's high of US$9.48 and then at US$9.50. First support is seen at Thursday's low of US$9.33 1/2 and then at US$9.21.

 

The DTN Meteorlogix Weather Service forecast said the U.S. Midwest is in store for unseasonably cold weather during the next few days, with some frost and freeze conditions in the northern Midwest on Saturday morning. Some minor damage is possible to late maturing soybeans. A rapid return to warmer weather is expected next week with only limited rainfall.

 

The National Oilseed Processors Association said Friday its August soybean crush rate was 137.6 million bushels. That was down from the July figure of 142.5 million bushels and above the 134.6 million at the same period last year. The average of estimates from analysts surveyed by Dow Jones Newswires was 138.5 million. Soyoil stocks were reported at 2.702 billion pounds. The stocks were down from the July stock figure of 2.835 billion, but above the average estimate at 2.650 billion.

 

September soybean deliveries totaled 109 lots. The house account at Term Commodities stopped 50 lots. The last trade date assigned was Sept. 12.

 

In other news, Indian soymeal prices have risen more than 10% during the past two weeks on strong demand from southeast Asian nations, mainly China, and a rise in freight charges that disadvantages more distant rivals Brazil and Argentina, traders and industry players said Friday.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Friday on profit-taking following strong gains recently, and analysts expect a further downward correction next week. The benchmark May 2008 soybean contract settled RMB32 lower at RMB4,034 a metric tonne.

 

Cash soybean prices in China's major producing regions were little changed in the week to Friday, while trade remained quiet on a lack of fresh supply.

 

Crude palm oil futures on Malaysia's derivatives exchange ended sharply higher Friday on strong festival demand and palm olein purchases by a large trading company to meet export commitments, said market participants. The benchmark November contract ended MYR52 higher at MYR2,592/tonne.