November 3, 2006

 

CBOT Soy Outlook on Friday: Down 4-6 cents; e-CBOT, thurs poor tech close

 

 

Soybean futures on the Chicago Board of Trade are seen opening Friday's day session lower, in tune with overnight action amid pre weekend profit taking.

 

Soybean futures are called to open 4 to 6 cents lower.

 

In e-CBOT trade, November soybeans were 6 cents lower at US$6.42 1/4 and January was 4 1/2 cents lower at US$6.56 3/4 per bushel.

 

Thursday's poor technical close is expected to attract profit taking pressure, with the market anticipating a large production estimate next week coupled with favorable weekend planting conditions in South America and harvest weather in the U.S. Midwest weighing on prices, said U.S. Commodities Don Roose.

 

Overnight weakness in Asian markets, and ample nearby supplies are seen aiding the defensive tone, with overbought conditions pointing toward an intermediate top in the market, analysts added.

 

However, some traders say based on past market performances, the sell-off could attract fresh speculative buying amid perceptions soybeans remain under priced in relation to corn.

 

A technical analyst said Thursday's price action in January soybeans could have produced a buying exhaustion tail on the daily bar chart, whereby buying interest dries up at higher price levels and then prices back way off the session high as buyers become exhausted. However, right now market bulls still have a solid technical advantage. The next upside price objective is to close prices above solid chart resistance at the contract high. The next downside price objective is closing prices below solid support at US$6.35.

 

First resistance for January soybeans is seen at US$6.65 and then at US$6.70. First support is seen at Thursday's low of US$6.60 and then at US$6.55.

 

The DTN Meteorlogix weather forecast says cold conditions leading to a hard freeze in all locations will firm the ground and allow for better harvest conditions for the end of this week and this weekend in the U.S. Midwest.

 

Meanwhile, rain and thunderstorms through southern soybean areas of Brazil during the weekend or during Monday will maintain soil moisture for early planted soybeans. A drier trend is possible in the north but conditions currently favor soybeans in that region. In Argentina, rain or thunderstorms during the weekend will help to maintain soil moisture for early planted soybeans, however most of next week looks to be dry, Meteorlogix forecasts.

 

In deliveries, a total of 1,760 delivery notices were posted against the November soybean future. The house account at ADM Investor Services was the principle issuer of 1,137 lots. The last trade date assigned was Nov. 2.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday. Spot cash soybean bids were up 12 cents in Cedar Rapids, Iowa, down 4 cents in Quincy Ill, and down 2 cents in Evansville, Ind., according to cash sources Friday.

 

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

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Friday, as local market participants expect CBOT soybean futures to fall on charts Friday. The benchmark May 2007 contract settled RMB21 lower to RMB2,820 a metric tonne, after trading between RMB2,808/tonne and RMB2,832/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply lower Friday, dragged down by weaker crude oil futures and profit-taking a day after the market rallied to 30-month highs, analysts said. The benchmark January CPO contract ended at MYR1,693 a metric tonne, down MYR31 from Thursday.