September 21, 2007

 

CBOT Soy Outlook on Friday: flat to down 2 cents; end of week consolidation

 

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's day session with a steady to lower tone, taking their cue from overnight trade as the market consolidates after another run to multi-year highs Thursday.

 

CBOT soybean futures are called to start the session steady to 2 cents lower.

 

In overnight e-CBOT trading, November soybeans were 1 1/2 cents lower at US$9.87, and January soybeans were 1 3/4 cents lower at US$10.02 1/2.

 

The market is poised for some consolidation, as end of the week profit taking is seen emerging after a week of sharp upside movement, analysts said.

 

A quiet news front is not providing any fresh incentives to spark carryover bullish momentum, analysts added. However, supportive long range fundamental outlooks, inflation fears and a strong demand profile is expected to limit downside movement, traders said.

 

Meanwhile, harvest related pressure is expected to begin emerging in the market, but with the allure of chasing nearby prices to the US$10.00 level and the need to keep values at levels that will encourage increased South American acres, traders remain on guard for another speculative and technical buying push, a CBOT floor analyst said.

 

Thursday's intraday high in the nearby November contract came within 3 1/2 cents of the US$10.00 per bushel level, while the January, March and July contracts settled above that psychological mark.

 

A technical analyst said prices are still in a steep uptrend from the August low, with no strong technical signs of a market top being in place. The next upside price objective for November soybeans is to push and close prices above major psychological resistance at US$10.00 a bushel. The next downside price objective is closing prices below support at this week's low of US$9.53.

 

First resistance for November soybeans is seen at Thursday's contract high of US$9.96 1/2 and then at US$10.00. First support is seen at Thursday's low of US$9.78 1/2 and then at US$9.72 - the bottom of Thursday's upside price gap on the daily chart.

 

The DTN Meteorlogix Weather Service forecast said any significant rainfall during the next 7-10 days will be confined to Rio Grande do Sul and southern Parana. Hot, dry weather will continue over central Brazil. There is no sign of any significant rainfall developing in the northern Mato Grosso until possibly the latter part of the first week of October.

 

In the U.S. Midwest, generally favorable harvest weather is expected through the weekend. Scattered showers and thunderstorms early next week will disrupt the harvest before dry weather returns during the middle of next week. Some showers could return later next week, Meteorlogix forecasts.

 

In other news, private analytical firm Informa Economics estimated 2008-09 U.S. soybean planted acreage at 68.9 million acres, sources said Thursday. U.S. farmers seeded 64.081 million soybean acres in 2007, according to the U.S. Department of Agriculture. Informa estimated 2008-09 soybean production at 2.941 billion bushels using a trend line yield estimate of 43.2 bushels per acre.

 

China's soybean output in the 2007/08 crop year is likely to fall to 13 million metric tonnes due to a drought in major soybean producing regions, said Zhu Yufeng, general manager of grain, oilseeds and sugar at Louis Dreyfus Commodities Beijing Trading Co., during the Third JCI China Feed Market Conference Friday. The country's soybean imports in the 2008/09 crop year starting October 2008 will likely rise to 34 million tonnes to meet domestic demand, he added. China's soybean output in 2006/07 crop year totaled 15.97 million tonnes, according to think tank China National Grain and Oils Information Center.

 

Global soybean prices are likely to remain at their current high levels until the end of the year because of increasing demand for both edible and non-edible purposes, Fernando L. Nebbia, undersecretary in Argentina's Ministry of Agriculture, said on the sidelines of the 11th Globoil India conference Friday.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Friday on rising prices at CBOT and China's inflation outlook. The benchmark May 2008 soybean contract settled RMB29 higher at RMB4,107 a metric tonne.

 

Cash soybean prices in China's major producing regions were higher in the week ended Friday on increasing concerns over possible further reduced output this year.

 

Crude palm oil futures on Malaysia's derivatives exchange ended sharply higher Friday on strong buying support, taking cues from bullish soyoil and crude oil market, participants said. The benchmark December contract at the Bursa Malaysia Derivatives ended MYR37 higher at MYR2,606/tonne after reaching an intra-day high of MYR2,608/tonne.