October 20, 2006

 

CBOT Soy Outlook on Friday: Up 1-2 cents; following overnight theme

 

 

Soybean futures on the Chicago Board of Trade are expected to start Friday's day session modestly higher, in step with overnight gains, with spillover strength from other markets aiding the advances.

 

Soybean futures are called to open 1 to 2 cents higher.

 

In e-CBOT trade, November soybeans were 2 1/2 cents higher at US$6.10 1/2 and January was 1/4 cent higher at US$6.22 3/4 per bushel.

 

The market is poised to edge higher, maintaining its recent upturn in prices, with technical momentum, strength in soyoil and other grains and supportive underlying demand keeping sellers on the run, analysts said.

 

However, a quiet news front is not providing any fresh market incentives to key off of, and any sign of upside exhaustion could produce profit taking pressure amid overbought market conditions and ample domestic and world supplies, said a CBOT floor analyst.

 

The relative strength index for November soybeans stood at 77.33 at Thursday's settlement. A RSI reading of 70.0 or above is considered overbought. For the week November soybeans are 16 1/2 cents higher.

 

A technical analyst said market bulls have gained solid upside technical momentum recently, but futures are now overdone on the upside and due for a decent corrective pullback soon. The next upside price objective is to close November prices above solid chart resistance at US$6.50. The next downside price objective is closing prices below solid support at US$6.00.

 

First resistance for January soybeans is seen at Thursday's high of US$6.27 1/2 and then at US$6.30. First support is seen at Thursday's low of US$6.19 and then at US$6.15.

 

The DTN Meteorlogix weather forecast says the highest risk for further harvest delays is in Indiana and Ohio during the next five days, after that wet weather may also include the western areas. Mainly dry conditions are on tap for the eastern Midwest Friday. There's a chance for light showers through western and northern areas of the region Saturday, with a chance for light to moderate showers through southern and eastern areas Saturday night or early Sunday. Temperatures will average below normal Friday, near to below normal Saturday, and below normal Sunday.

 

In the western Midwest, a chance for a few light showers is in store for Friday. Light or locally moderate showers are possible through central Missouri Saturday, with mainly dry conditions Sunday. Temperatures will average near to above normal Friday, below normal Saturday, and well below normal Sunday, Meteorlogix reports.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday. Spot cash soybean bids were up 5 1/2 cents in Keokuk, Iowa, up 10 cents in central Illinois, and up 4 cents in St. Louis, according to cash sources Friday.

 

Rotterdam soybeans were mixed and soymeal were lower. European vegoils were higher.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mixed Friday. The benchmark January 2007 contract fell RMB5 to settle at RMB2,586 a metric tonne, after trading between RMB2,581/tonne and RMB2,594/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday, boosted by gains in other key commodities including crude oil futures and strong export data, traders said. The benchmark January CPO contract ended at a two-month high of MYR1,623 a metric tonne, up MYR13 from Thursday.