October 23, 2009

 

CBOT Soy Outlook on Friday: Higher as soggy weather delays harvest

 

 

Soggy weather in the U.S. Midwest is expected to give Chicago Board of Trade soybeans a strong start Friday following overnight gains.

 

Soybeans are called 13 to 15 cents higher. In overnight trade, November soybeans were up 15 1/4 cents to US$10.20 3/4 per bushel and January soybeans were up 15 1/2 cents to US$10.22 1/2.

 

December soymeal was up US$5.30 to US$306.10 per short tonne and December soyoil was up 31 points to 38.61 cents per pound.

 

Analysts say rainfall and harvest delays will be the main supportive factor Friday. Traders in Chicago don't have to look at the weather report to confirm the soggy conditions, as it has rained throughout the region for roughly 24 hours straight.

 

Forecasts are calling for more of the same in the U.S. Midwest.

 

"Rain, thunderstorms, wind and some snow will likely mean continued harvest delays for the Midwest region during the last part of this week and probably next week as well," DTN Meteorlogix said.

 

The soybean harvest was only 30% complete as of Sunday, down from the average of 72%, the USDA said. Analysts say Monday's crop progress report from the U.S. Department of Agriculture may show only limited progress this week.

 

The delayed harvest is keeping near-term supplies tight.

 

"We continue to operate under premise that [the October] rally in grains and oilseeds is more about the outside markets and the starving fall pipeline than it is about concern over late season cuts in supply," Rich Feltes, MF Global senior vice president for research, said in a commentary.

 

The dollar has been a key factor in the markets' climb recently, but is not seen as a major influence Friday morning.

 

The market has support from solid export demand, analysts say, and looks strong technically as well. Farm Futures said in a morning commentary that overnight action "cemented gains over US$10."

 

The next upside technical objective for the bulls is pushing and closing November prices above technical resistance at the August high of US$10.66 a bushel, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below solid technical support at US$9.71 a bushel.

 

First resistance for November soybeans is seen at Thursday's high of US$10.09 1/2 and then at this week's high of US$10.15, the technical analyst said. First support is seen at US$10.00 and then at Thursday's low of US$9.94.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher in rangebound trade Friday, capped by ample inventories, trade participants said.

 

The benchmark January contract on the Bursa Malaysia Derivatives ended 28 ringgit higher at MYR2,238 a metric tonne, after rising to a seven-week high at MYR2,250 during the afternoon session.

 

Soybean futures rose slightly on the Dalian Commodity Exchange Friday, following Chicago Board of Trade and broad commodities complex gains, as local spot prices and equity markets also found room to rise.

 

The benchmark May soybean contract settled up 0.2% at 3,754 yuan a metric tonne.