September 22, 2006

  

CBOT Soy Outlook on Friday: Down 1-2 cents, e-CBOT; stabilizing recent gains

  

 

Soybean futures on the Chicago Board of Trade are seen starting Friday's day session modestly lower, following in the foot steps of overnight trade, as the market attempts to scale back Thursday's gains.

 

In e-CBOT trade, November soybeans were 1-cent lower at US$5.57 per bushel. Soybean futures are called to open 1 to 2 cents lower.

 

Talk of Thursday's advances being a bit overdone have traders anticipating prices drifting lower initially, said a CBOT floor analyst.

 

However, traders say a quiet news front isn't providing direction to prices, and the early declines could fade quickly amid carryover upside technical momentum and lingering concerns over wet conditions slowing harvest operations. Firm cash prices and the need for the market to move to levels that will pull some old crop supplies into the pipeline as well as higher outside markets are seen underpinning prices, analysts added.

 

Nevertheless, end of the week positioning is expected to limit upside moves as outlooks for drier conditions in the western belt next week opens up opportunities for harvest operations to bounce back after a wet weekend, analysts said.

 

A market technician said it will take a close above technical resistance at the September high of US$5.63 in November soybeans to provide some fresh upside technical momentum. The next downside price objective is closing prices below solid support at US$5.50.

 

First resistance for November soybeans is seen at US$5.61 1/2 - Thursday's high - and then at US$5.63. First support is seen at US$5.55 and then at US$5.52 - Thursday's low. In soymeal, Thursday's price action saw a bullish upside breakout from a recent trading range at lower price levels. Now, it will be important for the market to show some important follow-through strength Friday or early next week to sustain fresh upside technical momentum, a technical analyst said.

 

First resistance for December soymeal comes in at Thursday's high of US$169.50 and then at US$172.00. First support is seen at Thursday's low of US$167.00 and then at US$166.00.

 

Meanwhile, Indian soymeal is currently fetching a premium of up to US$18 a metric tonne over prices quoted on the CBOT for sales to southeast Asian destinations, traders said Friday. Soymeal of Indian origin is enjoying a premium because of its proximity to southeast Asian countries, which means lower freight costs compared to deliveries from the Americas, analysts said. In addition, Indian exporters have sold 600,000-700,000 metric tonnes of soymeal to Southeast Asian buyers for delivery between October and December, a senior industry official said Friday.

 

The DTN Meteorlogix weather forecast says cool, wet weather the next few days will slow crop dry down and delay the harvest. Some improvement in harvest weather is seen for the western Midwest next week, but harvest disruptions will continue in the eastern Midwest.

 

In the western Midwest, episodes of scattered showers and rain are forecast for the next 48 hours. Rainfall totals of 0.25-1.00 inch are expected. Dry conditions are on tap for Sunday-Tuesday, with just a few light showers possible Wednesday and Thursday. In the eastern belt, showers and thunderstorms are expected for the next 48 hours, with rainfall totaling 0.50-2.00 inches. A few lingering light showers are seen for Sunday, with dry conditions on tap for Monday and Tuesday. Scattered showers and thunderstorms redevelop Wednesday continuing on Thursday, Meteorlogix forecasts.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday. Spot cash soybean bids were down 5 cents in Sioux City, Iowa, down 3 cents in Peoria, Ill., and up 10 cents in Decatur, Ind., according to cash sources Friday.

 

Rotterdam soybeans and soymeal were mostly higher. European vegoils were flat to lower.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Friday, in line with overnight gains on the Chicago Board of Trade, said analysts. The benchmark January 2007 contract settled RMB7 higher at RMB2,552 a metric tonne, after trading between RMB2,548 and RMB2,558/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives exchange ended higher Friday, boosted by a recovery in crude oil prices and expectations of upbeat price forecasts from analysts at an upcoming industry conference. The benchmark December CPO contract ended up MYR10 at MYR1,545 a metric tonne.