November 2, 2007

 

CBOT Soy Outlook on Friday: Seen 2-4 cents higher on crude oil, weaker dollar

 

 

Chicago Board of Trade soybean futures are seen starting day time trading 2-to-4 cents higher, following the strength in crude oil futures and the modest gains set in overnight trading, an analyst said.

 

In overnight e-CBOT trading, January gained 2 1/2 cents to US$10.09 per bushel. e-CBOT volume in January was 3,626 contracts.

 

Soybeans were modestly higher in overnight trading, benefiting from short covering and should draw support from stronger crude oil prices, a commission house analyst said. In addition, the dollar is weaker and could provide some additional strength, the analyst added.

 

A slightly larger crop estimate from FCStone Thursday afternoon isn't expected to have much impact, a trader said. FCStone pegged the U.S. soybean crop at 2.651 billion bushels with a yield of 42.2 bushels per acre. In October, the U.S. Department of Agriculture reported U.S. soybean production at 2.598 billion bushels with a yield of 41.4 bushels per acre.

 

Late harvest-season weather remains favorable over the next several days, DTN Meteorlogix Weather said.

 

Dry weather is expected Saturday with only a few light showers possible Sunday in the western U.S. Midwest, with dry weather forecast through Sunday in eastern sections of the region. Temperatures are expected to average near-to-above normal in the period.

 

On daily technical charts, January soybeans closed sharply lower, but near mid-range on profit taking and lower outside markets, a technical analyst said. Bulls don't want to see a bearish weekly low close Friday, as it would raise the specter of a bearish double-top reversal pattern developing on the daily bar chart, the analyst said. The next upside price objective for the bulls is to close prices above solid technical resistance at the contract high of US$10.33 1/2 per bushel. The next downside objective for the bears is closing prices below strong support at US$9.80.

 

First resistance for January soybeans is seen at US$10.15 and than at US$10.23 1/2, Thursday's high. First support is seen at US$10.00 and then at Thursday's low of US$9.94.

 

Deliveries posted against the Chicago Board of Trade November soybean future were 28 contracts Friday. Issuers included the customer account of RJ O'Brien, which issued 25 contracts and the customer account of ADM Investor Services, which issued 3 contracts. The customer account of RJ O'Brien stopped all 28 contracts. The last trade assigned was Oct. 16.

 

In overseas markets, crude palm oil futures settled lower on the Bursa Malaysia Derivative Exchange on lower crude oil and soybean oil prices with the benchmark January contract ending 13 Malaysian ringgit lower at MYR2,917/tonne.

 

In other soybean news, cash soybean prices surged in China in the week ended Friday as farmers are reluctant to sell due to lower production expected this year from a severe drought, analysts said.

 

Soybean futures on China's Dalian Commodities Exchange settled lower as weaker crude oil futures pressed the market. The benchmark May 2008 contract settled 32 yuan lower at RMB4,374 per metric tonne.