August 3, 2007

 

CBOT Soy Outlook on Friday: Up 2-4 cents; midwest weather underpins prices

 

 

Chicago Board of Trade soybean futures are seen starting Friday's day session on firm footing, continuing to add risk premium amid hot Midwest weather conditions.

 

CBOT soybean futures are called to start the session 2 to 4 cents higher.

 

In overnight e-CBOT trading, August soybeans were 2 cents higher at US$8.33 per bushel, and November was 4 1/2 cents higher at US$8.59.

 

Weather during the soybean crops critical yield development stage is serving as the key driver of prices, and with hot temperatures seen throughout the Midwest, traders are leaning toward adding some premium to prices, analysts said.

 

Strength in outside crude oil and metals markets are expected to lend support to prices in early trader as well, analysts added.

 

However, traders will keep a close eye on weather updates for lasting direction, with forecasts of scattered rains during the weekend and early next week providing light pressure to limit upside aggressiveness heading into the weekend, traders said. Otherwise, futures are seen hovering in a sideways pattern, until a clearer outlook on yields is established, a trader added.

 

In other news, private analytical firm Informa Economics is expected to release its August production and yield estimates around 11:30 a.m. EDT.

 

A technical analyst said the next downside price objective for November soybeans is closing prices below solid support at the July low of US$8.34. The next upside price objective is pushing prices above solid technical resistance at US$8.69 1/2, which would fill on the upside a downside price gap on the daily bar chart.

 

First resistance for November soybeans is seen at Thursday's high of US$8.60 and then at this week's high of US$8.67. First support is seen at US$8.50 and then at US$8.47 1/2.

 

The DTN Meteorlogix Weather Service forecast said more rain is in the forecast for the northern and western Midwest during the early to middle part of next week on top of the rain which remains in the forecast for the weekend.

 

The western Midwest is forecast to have episodes of scattered showers and thunderstorms on Saturday and again during the first half of next week. The weather will benefit filling corn and soybeans especially in the drier areas. In the eastern Midwest, scattered showers over the weekend and again during the middle of next week will benefit filling corn and soybeans. However, mostly above normal temperatures during the next 7 days will increase soil moisture usage, Meteorlogix reports.

 

Deliveries notices posted against August soybean futures totaled 2,058 lots. Customer accounts at JP Morgan issued 1,028 lots and stopped of 1,123 lots. The last trade date assigned was August 2.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended slightly lower Friday after a dull trading day amid lingering uncertainty about supply and demand in the coming months. The benchmark October contract on Bursa Malaysia Derivatives ended at MYR2,582 a metric tonne, down MYR20 from Thursday.

 

In Singapore's Joint Asian Derivatives Exchange, CPO trading volume was very thin, with only 2 lots traded.

 

Soybean futures traded on the Dalian Commodity Exchange settled higher Friday, following gains on the Chicago Board of Trade overnight. The benchmark January 2008 soybean contract settled RMB31 higher at RMB3,434 a metric tonne.

 

Meanwhile, cash soybean prices in China's major producing regions were higher in the week ended Friday on weather concerns.