January 23, 2008

 

CBOT Soy Outlook on Wednesday: Steady to up 2 cents; looking for stability

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session steady to firm, in tune with overnight trade, as the market looks for stability following Tuesday's volatile action.

 

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

 

In overnight e-CBOT trading, March soybeans were 1/2 cent higher at US$12.40, July soybeans were 3/4 cent higher at US$12.71 1/2, and November soybeans were 2 1/4 cents lower at US$12.15 1/4.

 

Light short covering is anticipated after Tuesday's slide, but nervous, volatile trade is expected to continue as the market keeps an eye on outside equity markets for signs the Federal Reserve's surprise rate cut Tuesday, will calm world market jitters, analysts said.

 

Otherwise, traders will keep a close eye on technical indicators, with bearish chart signals and uncertainty surrounding South American crops keeping participants on edge, analysts added.

 

Nevertheless, the influence of outside markets will remain a dominant feature near term, overshadowing underlying fundamentals until the industry gets a handle on the world economic situation, a CBOT floor broker said.

 

A technical analyst said some near-term chart damage has occurred recently. It appears the seasonal "February Break" phenomenon is occurring in grains. The next downside price objective for March soybeans is pushing prices below solid technical support at Tuesday's low of US$12.20.

 

First resistance for March soybeans is seen at Tuesday's high of US$12.55 1/2 and then at US$12.68. First support is seen at US$12.36 and then at US$12.20.

 

The DTN Meteorlogix Weather Service said moisture stress continues to developing soybeans in the major growing areas of Argentina. Some shower activity is possible in western growing areas during this weekend but this is not expected to be a significant system. The five-day period is not very hot. The 6-10 day period may be hotter, but this is a long range outlook and subject to significant day to day changes, Meteorlogix reports.

 

In Brazil, it appears to be a drier period for Rio Grande do Sul soybean areas but not very hot. There are no significant weather concerns at this time in Brazil, Meteorlogix said.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled up Wednesday as the U.S. rate cut overnight helped to restore sentiment. Some bargain hunting also appeared after the panic selling Tuesday. The benchmark September 2008 soybean contract settled RMB36 higher at 4,607 a metric tonne.

 

Malaysian crude palm oil futures were closed Wednesday for a public holiday.