December 21, 2007

 

CBOT Soy Outlook on Friday: Firmer start on e-CBOT, weather

 

 

Firmer overnight trade and worries over continued dryness in Argentina should buoy Chicago Board of Trade soybean values Friday, analysts said.

 

In overnight trade, January soybean prices on e-cbot were up 6 3/4 cents a bushel at US$11.67 1/2. March was up 6 1/2 cents at US$11.86 1/4.

 

"The weekend weather in Argentina is variable, so we're adding risk premium to this market," said Don Roose, president, U.S. Commodities.

 

DTN Meteorlogix weather says in Argentina, dryness lingers Friday, but there's a chance for scattered thunderstorms, 0.25-1.00 inch (6-25mm), through eastern Cordoba, Sante Fe and far northern Buenos Aires during Saturday night into Sunday. However, there is little rain elsewhere in the region during this time. Temperatures remain in the 90 degrees Fahrenheit range.

 

The market is focusing on the weather in Argentina, which has experienced a dry spell. Although Argentina sometimes is in the shadow of its neighbor, Brazil, when discussions turn to production in South America, the tightness of U.S. soybean stocks means global production relies on both Argentina and Brazil having good harvests, analysts said.

 

Roose said CBOT soybeans are a "market that is two steps forward, one step back. What price will we reach to see a slow down in demand?"

 

In other news, crude palm oil futures rose, breaking above MYR3,000 a tonne, again, as excessive rains in palm-producing areas of Malaysia continue. Palm oil exports remain stout at the higher prices, also supporting trade. The benchmark March contract on Bursa Malaysia Derivatives ended MYR30 higher at MYR2,992 a metric tonne after reaching an intraday high of MYR3,001/tonne.

 

Dalian Commodity Exchange soybean futures also were firmer following gains at the CBOT. The benchmark September 2008 soybean contract rose RMB22 to settle at RMB4,469 a metric tonne. Cash soybean prices in China's major producing regions were mostly stable in the week to Friday.

 

World coconut oil prices ended marginally higher this week, following gains in other vegoil markets.

 

Rotterdam soybean prices were mixed to firmer and soymeal prices were generally steady. E.U. vegoil prices were mixed.

 

Analysts said while the trend for soybeans is higher, given that Friday is the last day of the last full trading week of the year, there could be some profit-taking as firms began to square their books ahead of the end of the year. However, any significant dips in prices are likely to be viewed as buying opportunities.

 

Looking at technical charts, first resistance for March soybeans is seen at Thursday's contract high of US$11.86 1/2 and then at US$12.00. First support is seen at Thursday's low of US$11.73 and then at this week's low of US$11.65.