June 27, 2008

 

CBOT Soy Outlook on Friday: Up 10-15 cents on outside markets, weather issues

 

 

Soybean futures at the Chicago Board of Trade are seen higher to start Friday's day session, bolstered by the combination of bullish outside market influences, Midwest rains and outlooks for supportive acreage and stocks data Monday.

 

CBOT soybean futures are called to start the session 10 to 15 cents higher.

 

In overnight electronic trading, July soybeans were 13 1/2 cents higher at US$15.87 3/4 and November soybeans were 11 3/4 cents higher at US$15.73 1/4. December soyoil was 54 points higher at 68.00 cents per pound and December soymeal was US$2.20 higher at US$407.90 per short tonne.

 

The market is poised to follow through on Thursday's upswing, with record high crude oil prices above US$142 a barrel overnight, weakness in the U.S. dollar, and Midwest rains that threaten crop quality and late seedings serving as the catalysts, analysts said.

 

Market uncertainties tied to 2008 acreage and demand amid already tight supply concerns is expected to keep an edge in the market, limiting downside risks, analysts added.

 

Inflationary concerns will attract speculative buyers, as investors move money into hard assets amid weakness in outside equity markets, a CBOT floor broker said.

 

Nevertheless, end-of-the week, month and quarter profit-taking is expected to emerge during the course of the day, as traders remain leery of the risks associated with holding positions amid the potential for weather changes that could occur during the weekend, he added.

 

A technical analyst said market bulls have solid near-term technical momentum on their side. The next upside price objective for the bean bulls is to push and close prices above major psychological resistance at US$16.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at this week's low of US$14.73 3/4.

 

First resistance for November soybeans is seen at Thursday's contract high of US$15.69 1/2 and then at US$16.00. First support is seen at US$15.50 and then at US$15.40.

 

The DTN Meteorlogix weather forecast said the Midwest remains in an active weather pattern. There should be frequent periods with thunderstorms and only minor, 1-3 day periods, of drier weather. Some heat is forecasted ahead of rain systems, but also some fairly cool conditions behind the systems. There is some risk for local flooding. There is a risk for crop quality problems, Meteorlogix said.

 

The U.S. Department of Agriculture is expected to show a modest decrease in soybean seedings from its March prospective plantings report with soybean stocks as of June 1 reflecting solid third-quarter usage in its reports scheduled for release at 8:30 a.m. EDT (1230 GMT) Monday.

 

Analysts surveyed by Dow Jones Newswires estimate average soybean acreage at 74.203 million acres, down 590,000 acres from the March projection of 74.793 million. The estimates from the 18 analysts surveyed ranged between 71.965 million and 76.000 million acres. USDA is expected to report soybean stocks at 669 million bushels in its quarterly Grain Stocks report. Estimates ranged from 615 million to 743 million. Stocks as of March 1 totaled 1.428 billion bushels.

 

Chinese importers bought seven to nine cargoes of soybeans mainly from the U.S. and Brazil this week, commodity consultancy Shanghai JCI said Friday. Chinese importers didn't purchase any soybeans from Argentina, given uncertainties about the farmers' strikes, said Tu Xuan, an analyst at the firm.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Friday, tracking Thursday's gains in the CBOT soybean contract. The benchmark January 2009 soybean contract rose RMB76 to settle at RMB5,119 a metric tonne, after trading between RMB5,095/tonne and RMB5,148/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended higher Friday on price rallies in crude oil and soybean oil futures, trade participants said. The benchmark September contract on the Bursa Malaysia Derivatives ended MYR88 up at the intraday high of MYR3,623 a metric tonne.