October 26, 2007

 

CBOT Soy Outlook on Friday: Up 6-8 cents on strong outside market influences

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session on a positive note, following the overnight theme amid supportive outside market influences.

 

CBOT soybean futures are called to start the session 6 to 8 cents higher.

 

In overnight e-CBOT trading, November soybeans were 7 1/4 cents higher at US$10.02 per bushel, and January soybeans were 7 1/2 cents higher at US$10.20.

 

A slide to record lows in the U.S. dollar index, and record highs posted overnight in crude oil and Malaysian palm oil futures are expected to lend support to prices, analysts said.

 

The influence of higher inflation-based commodities is expected to produce broad based commodity buying, analysts added. Meanwhile, technically related buying is expected to aide the higher tone, with traders encouraged by the markets ability to break out of a month long trading range overnight.

 

However, pre weekend profit taking, farmer hedging ahead of an active harvest weekend, and the absence of any fresh supportive fundamental news may limit gains, as participants book some profits, a CBOT floor broker added.

 

Nevertheless, traders will keep an eye on the November contracts ability to hold above the US$10 level ahead of Friday's option expiration, he added.

 

A technical analyst said market bulls regained some fresh upside technical momentum Thursday and a weekly high close on Friday would be more bullish and would likely produce a bullish upside breakout from a recent sideways trading range on the daily bar chart. The next upside price objective for January soybeans is to push and close prices above solid technical resistance at last week's high of US$10.15. The next downside price objective is closing prices below solid support at this week's low of US$9.80.

 

First resistance for January soybeans is seen at US$10.15 and then at US$10.25. First support is seen at US$10 and then at Thursday's low of US$9.96.

 

The DTN Meteorlogix Weather Service forecast said dry conditions or possibly a little light precipitation is on tap for the western U.S. Midwest Friday and Saturday. Mainly dry conditions are seen for Sunday. Temperatures will average near to slightly above normal. Mainly dry conditions are expected Monday and Tuesday, with temperatures averaging above normal. In the eastern Midwest, there is a chance for light rain or drizzle Friday. Showers end early Saturday over northern areas, with mainly dry conditions expected Sunday. Temperatures will average near to above normal Friday and Saturday, and near normal Sunday.

 

Meanwhile in Brazil, recent rainfall has helped to improve conditions for early soybeans in Mato Grosso and Goias. However, it now looks to be drier and somewhat hotter for at least the next 5-7 days. After that showers may redevelop. The new soybean areas of western Bahia look drier and much warmer than normal during the next week or more, Meteorlogix reports.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled at record prices Friday on higher soybean prices at CBOT Thursday. The benchmark May 2008 soybean contract settled RMB71 higher at 4,373 a metric tonne.

 

Soybean prices in China were higher in the week ended Friday due to supply shortage, a result of a heavy snowfall in major producing regions.

 

Crude palm oil futures on Malaysia's derivatives exchange rose sharply to end at record highs Friday, tracking gains in soyoil and crude oil prices and following a hike in Indonesian export tariffs, market participants said. The benchmark January CPO contract on Bursa Malaysia Derivatives ended MYR93 higher at an intraday high of MYR2,800 a metric tonne.