July 25, 2008


CBOT Soy Outlook on Friday: Seen up 2-3 cents, pre-weekend consolidation



Chicago Board of Trade soybean futures are seen starting Friday's day session higher, underpinned by consolidative buying ahead of the weekend.


CBOT soybean futures are called 2 to 3 cents higher.


In overnight electronic trading, August soybeans were 2 1/2 cents higher at US$13.87 1/2 and November soybeans were 2 1/2 cents higher at US$13.75 1/2. December soyoil was 26 points lower at 59.94 cents per pound and December soymeal was US$0.40 lower at US$359.40 per short tonne.


The market is deeply oversold, and with the variability of Midwest crops, the uncertainties of acreage, yield and slowing usage, futures are poised to consolidate, said Jason Roose, analyst with U.S. Commodities in West Des Moines, Iowa.


Mixed signals from outside markets are expected to promote a position-evening theme, with traders taking a cautious approach heading into the weekend.


However, soybeans are still a liquidating market, with non-threatening near-term weather and technical pressure potentially weighing on prices, opening the door for two-side action, Roose added.


A technical analyst said prices are in a three-week-old downtrend on the daily bar chart. The next upside price objective for November soybeans is to push and close prices above psychological resistance at US$14.00 a bushel. The next downside price objective is pushing and closing prices below solid technical support at US$13.50.


First resistance for November soybeans is seen at US$14.00 and then at US$14.14 1/2. First support is seen at Thursday's low of US$13.56 and then at US$13.50.


The DTN Meteorlogix Weather forecast said rainfall and only brief hot spells favors crops in the Midwest with two possible exceptions - the potential for severe flooding in northern Missouri due to frequent heavy downpours and possible excessive dryness in some parts of the Minnesota area as rains track mostly south of the region.


In the Delta, episodes of hot temperatures and below normal rainfall will continue to stress soybeans and cotton in this region.


In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Friday on a technical rebound, after their counterparts' decline on the CBOT slowed Thursday. The benchmark January 2009 soybean contract settled RMB14 higher at RMB4,559 a metric tonne.


Cash soybean prices in China's major producing regions were slightly lower in the week to Friday on a tumble in futures but were supported by limited stocks with farmers.


Chinese importers booked two to three cargoes of soybeans this week, mostly from the U.S. and Argentina, commodity consultancy firm Shanghai JCI said Friday.


Crude palm oil futures on Malaysia's derivatives exchange ended lower in thin trade Friday on negative leads from soyoil, despite a sharp rise in exports, trade participants said. The benchmark October contract on Bursa Malaysia Derivatives ended MYR43 lower at MYR3,070 a metric tonne close to an intraday low of MYR3,065.

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