January 6, 2010

 

CBOT Soy Outlook on Wednesday: Seen mixed; looking for direction

 

 

Chicago Board of Trade soybean futures are expected to open Wednesday's day session mixed, looking for direction in the absence of definitive market influences.

 

In overnight trade, January soybeans were 3/4 cent higher at US$10.53, and March soybeans were 3/4 cent lower at US$10.60 1/4.

 

The market is seen likely to get support from the anticipation of fresh investment money flowing into futures as index funds rebalance positions, said Don Roose, president of U.S. Commodities.

 

However, hedge selling continues to emerge on rallies, and with favorable South American weather and large deliveries posted against nearby soybeans and soyoil, there is not a lot of real price strength, Roose added.

 

Nevertheless, as traders wait for index fund rebalancing and freezing U.S. Midwest weather promotes increased soymeal feed demand the market will continue to find it hard to attract aggressive sellers.

 

Otherwise, traders are taking a cautious approach, looking ahead to next week's U.S. Department of Agriculture production, quarterly stocks and supply and demand reports.

 

Meanwhile, higher Chinese soy futures are seen adding mild price support.

 

Soybean futures on the Dalian Commodity Exchange settled higher Wednesday due to concerns that January soybean arrivals could be trapped at ports, boosting demand for local crops. The September 2010 soybean contract settled RMB70, or 1.7%, higher at RMB4,140 a metric tonne.

 

A technical analyst said the next upside technical objective for CBOT March soybeans is pushing and closing prices above solid technical resistance at US$10.84. The next downside price objective is pushing and closing prices below solid technical support at US$10.27.

 

The T-storm Weather forecast said rain through next week will maintain favorable soybean prospects in South America. Dry pockets in southern Brazil need to diminish for higher yield potential, but rain will move through the region this weekend. Meanwhile, dry pockets in southern Argentina need to diminish, with rain on tap for early next week.

 

January soybean deliveries totaled 789 lots. Customer accounts at Man Professional Clearing issued and stopped 421 and 538 lots respectively. The last trade date assigned was Jan. 5.

 

January soyoil deliveries totaled 4,806 lots. Customer accounts at Man Professional Clearing issued and stopped 2,394 and 2,047 lots respectively. The last trade date assigned was Jan. 5.