January 10, 2007

 

CBOT Soy Outlook on Wednesday: Seen up 1-2 cents, following overnight theme

 

 

Chicago Board of Trade soybean futures are poised to start Wednesday's day session with modest gains, taking its cue from overnight trade as the market attempts to stabilize from recent price declines.

 

Soybean futures are called to open 1 to 2 cents higher.

 

In e-CBOT trade, January soybeans were 1/2-cent higher at US$6.54 and March was 1 1/2-cent higher at US$6.66 per bushel.

 

A technical rebound from prior losses is expected to underpin futures to start the day, with light short covering providing a boost to futures, analysts said.

 

However, a quiet news front, with non-threatening South American weather conditions and outlooks for higher production and carryout forecasts in Friday's crop reports are seen limiting losses and promoting a sideways consolidation theme, traders added.

 

Meanwhile, traders remain on guard for spillover pressure from corn and wheat as speculative and index fund selling has been a constant in recent sessions.

 

U.S. Department of Agriculture is scheduled to release its annual production, supply and demand and quarterly grain stocks reports Friday at 8:30 a.m. EST. The average of trade estimates compiled by Dow Jones pegs production at 3.235 billion bushels up from USDA's November projection of 3.204 billion. The carryout estimate is 586 million bushels up from December USDA of 565 million bushels. Dec. 1 stocks are pegged at 2.736 billion bushels.

 

USDA said private exporters reported the sale of 120,000 metric tonnes of U.S. soybeans to unknown destinations in the 2006-07 marketing year.

 

A technical analyst said there is the specter of a bearish head-and-shoulders top reversal pattern forming on the daily March soybean bar chart. The next upside price objective is to close prices above solid resistance at US$6.80 a bushel. The next downside price objective is closing prices below solid support at the December low of US$6.57 1/2.

 

First resistance for January soybeans is seen at Tuesday's high of US$6.70 and then at US$6.74 1/2 - the top of Tuesday's downside price gap on the daily chart. First support is seen at Tuesday's low of US$6.61 3/4 and then at US$6.57 1/2.

 

The DTN Meteorlogix weather forecast said South American weather conditions remain non-threatening, with scattered thundershowers seen for Argentine crop areas Wednesday into Thursday. The rain is expected to be a little heavier and more widespread than the precipitation that moved across the region through yesterday, Meteorlogix reports. In Brazil, no significant weather concerns current exist, Meteorlogix said.

 

In news, Brazil sold about 17% of the 4 million metric tonnes of soybeans offered in two subsidy auctions Tuesday, the Agriculture Ministry said late Tuesday. Some 680,000 tonnes were sold in two auctions, known as PROP and Pepro. Of that total, 413,000 tonnes, or 21% of the 2 million tonnes offered, were sold in the farmer direct-subsidy auction known as Pepro.

 

In deliveries, a total of 545 delivery notices were posted against January soybeans. The last trade date assigned was January 8. 1,125 delivery notices were posted against the January soyoil futures. The house account at Bunge Chicago was the primary issuer of 1,042 lots. The last trade date assigned was Jan. 9. Soymeal delivery notices totaled 244 lots, with the house account at ADM Investor Services stopping 157 lots and the house account at Bunge Chicago stopping 75 lots. The last trade date assigned was Jan. 5.

 

Rotterdam soybeans and soymeal were mostly lower. European vegoils were mostly lower.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower for the second day in a row Wednesday, tracking Tuesday's losses in CBOT grains futures. The May 2007 contract settled RMB10 lower at RMB2,814 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday as friendly supply and demand data failed to make an impression on the market, which remains pressured by losses in related commodities and bearish technical conditions, analysts said. The March CPO contract ended down MYR9 at MYR1,881 a metric tonne.