November 17, 2006

 

CBOT Soy Outlook on Friday: Up 1-2 cents on e-CBOT, profit taking expected

 

 

Soybean futures at the Chicago Board of Trade are seen starting Friday's day session modestly higher, taking its cue from overnight prices, but traders anticipate selling pressure to emerge on any signs of upside exhaustion.

 

Soybean futures are called to open 1 to 2 cents higher.

 

In e-CBOT trade, January soybeans were 1 1/2 cent higher at US$6.58 and March was 1 1/4 cent higher at US$6.70 per bushel.

 

The overnight session will provide early direction for futures, but with a quiet news front and waning upside momentum amid the market's inability to challenge prior highs is expected to attract profit taking pressure, analysts said.

 

The market looks to have a little upside exhaustion at the moment, opening the door for a choppy, lower theme, particularly if neighboring grains and outside markets fail to generate spillover support, a CBOT floor analyst said.

 

A market technician said recent price declines have bullish momentum fading. The next upside price objective is to close prices above solid chart resistance at the January futures' contract high of US$6.82 1/2 a bushel. The next downside price objective for the bears is closing prices below solid support at US$6.50.

 

First resistance for January soybeans is seen at US$6.60 and then at US$6.65. First support is seen at Thursday's low of US$6.51 1/2 and then at US$6.50.

 

Soyoil futures are poised for a lower start, following weak overnight prices. Spillover weakness from declining crude oil futures is seen attracting liquidation pressure, analysts said.

 

Meanwhile, the DTN Meteorlogix weather forecast calls for drier weather conditions during the next 5-7 days in Argentina. Cool temperatures will be on tap at first before turning warmer. Soil moisture should favor early soybean development, at least for awhile. In Brazil, heavy rains and storms appear likely for Rio Grande Do Sul during the next 2-3 days, possibly causing some flooding. Hot, dry conditions will continue in the northern crop belt at least during the next 5-7 days. Long range charts suggest some pick up in shower activity but this is somewhat uncertain, Meteorlogix said.

 

In news, Philippine imports of soymeal could rise next year from the forecast import volume of 1.06 million metric tonnes this year on expected stronger demand from local feed millers, an industry official said Friday.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Friday. Spot cash soybean bids were down 2 cents in Sioux City, IA, up 7 cents in Quincy, Ill., and up 10 cents in St. Louis., according to cash sources Friday.

 

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

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Friday, supported by strong spot prices, analysts said. The most active May 2007 contract settled RMB3 higher at RMB2,913 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Friday as bullish sentiment, steady soyoil prices and a positive long-term demand outlook kept prices on an uptrend despite a weak crude oil market. The benchmark February contract ended at MYR1,764 a metric tonne, up MYR9 from Thursday.