January 14, 2009

 

CBOT Soy Outlook on Wednesday: 12-15 cents higher on follow-through, dry weather

 

 

Chicago Board of Trade soybean futures are expected to open with solid gains Wednesday, lifted by follow-through buying, firm prices in the grain and soy complex and continued weather concerns in Argentina.

 

CBOT soybean futures are called to open 12 cents-to-15 cents a bushel higher, traders said.

 

On Tuesday, March soybeans rose 5 1/2 cents to settle at US$9.71 1/2 a bushel, and the market is expected to generate bullish follow-through momentum in Wednesday's trade.

 

As in Tuesday's session, traders continue to focus on dry conditions in Argentina, as temperatures in the high 80s and 90s Fahrenheit combined with a lack of rainfall increase stress on developing soybeans. While scattered showers and thunderstorms are expected to develop over the weekend, producing 0.25-0.75 inch of rain, it will not be enough to provide "significant relief to crops," private forecaster DTN Meteorlogix said Wednesday.

 

Mostly dry weather and above-normal readings are expected for next week in Argentina, putting additional stress on the soy crop.

 

December figures from the National Oilseed Processors Association pegged the U.S. soybean crush at 134.787 million bushels, down 4.362 million from November. The news may put a slight damper on upside price movement, however, as many analysts had expected the crush to increase slightly from last month.

 

In other news, China's soybean futures rose Wednesday, supported largely by firm CBOT prices. Traders warned, however, that upside momentum is waning after the latest rebound and prices will likely consolidate in the near term.

 

The benchmark September 2009 soybean contract rose RMB58 to RMB3,434/tonne, up 1.7%, on the Dalian Commodity Exchange.

 

Traders will also keep their eyes on moves in the greenback. In early trade, the U.S. dollar index is firmer, which may add slight selling pressure to the market.

 

Technically, bull's next upside objective is to close above US$10 a bushel - major psychological resistance - on March beans, an analyst said. Bears will attempt to push prices below psychological support at US$9 a bushel.

 

Soy products are expected to follow beans higher, traders said.

 

The NOPA report pegged soyoil stocks in December at 2.176 billion pounds, up from 2.042 billion in November.

 

On soymeal, 3.176 million short tonnes were produced in December, down from 3.273 million in November. Soymeal exports were estimated at 607,705 tonnes, up from 509,459 previously, NOPA said.