October 27, 2006

 

CBOT Soy Outlook on Friday: Beans up 5-7 cents on overnight, tech momentum

 

 

Soybean futures on the Chicago Board of Trade are expected to open 5-7 cents a bushel higher on overnight gains and follow-through buying on renewed bullish momentum, sources said Friday.

 

In e-CBOT trade, November soybeans were up 6 3/4 cents to US$6.34 1/2, and January beans were also up 6 3/4 cents to US$6.48 1/2.

 

Follow-through technical momentum is expected to carry into Friday's session, after Thursday's higher close, led by speculative interest, sources said. In fact, price strength is seen throughout the grains floor, with corn called 3-5 cents higher and wheat up 9 to 11 cents.

 

Soybeans are also not trying to give up too much ground to the gains in corn, for fear of losing acres in the spring.

 

"I think soybeans have this 'Me too' attitude as much as anything else," said Don Roose, analyst and president of U.S. Commodities in West Des Moines, Iowa.

 

"While corn is trying to buy acres, soybeans are trying to not slip too far behind," he added.

 

The recent rally is more technical than fundamental, Roose said, though reports of Asian soybean rust in Indiana did provide support to Thursday's rally, and export sales have been constructive for the market.

 

Soybean futures on Thursday rose as speculative buying was re-ignited, partly on the strength of bullish technical momentum, sources said. In addition, sellers were largely on the sidelines in the face of the strong fund and speculative buying.

 

With the harvest at 76% complete as of last Sunday, and beginning to wind down, producers are attempting to store their beans. This is firming basis levels in the Midwest in order to try and pry the crop out of farmers' hands, Roose explained.

 

Traders will also be watching the outside markets for possible clues on speculative trading activity. December crude oil futures are 38 cents higher at US$60.74 a barrel in electronic trade. The Reuters/Jefferies Commodity Research Bureau Index, a basket of commodity prices, is unchanged at 311.78.

 

December gold is US$2.50 higher at US$602.30, and the U.S. dollar is trading lower against the world's major currencies.

 

Soybean futures on China's Dalian Commodity Exchange settled higher Friday, supported by the gains at the CBOT. The benchmark January contract rose RMB44 to RMB2,616 a tonne.

 

Soybean prices in China's major producing regions rose in the week to Friday, bolstered by rises in soymeal and soyoil values. China is expected to increase soybean imports in coming months, as demand for oil and meal strengthens.

  

SOY PRODUCTS

 

Soy product markets are expected to open higher on the gains notched overnight and on the higher soybean calls.

 

In electronic trade, December soymeal rose US$1.80 to US$187.90 a short tonne, while soyoil added 25 points to 27.29 cents a pound.

 

Soymeal and soyoil futures on China's Dalian Commodity Exchange rose in tandem with the gains in soybeans, which is supportive for the U.S. market.

 

Crude palm oil futures on the Bursa Malaysia Derivatives exchange closed sharply higher, with the benchmark January contract recording its strongest settlement since May 2004. January settled at MYR1,680 a tonne, up MYR30 from Thursday.

 

The rally in Malaysia was fueled mostly by speculative buying amid gains in other commodities, since current supply/demand factors aren't yet considered bullish.