January 29, 2008

 

CBOT Soy Outlook on Tuesday: Seen up 7-9 cents; firm overnight theme

 

 

Chicago Board of Trade soybean futures are seen starting Tuesday's day session higher, taking its cue from overnight price action, analysts said.

 

CBOT soybean futures are called to start the session 7 to 9 cents higher.

 

In overnight e-CBOT trading, March soybeans were 9 3/4 cents higher at US$12.63 1/2, July soybeans were 9 3/4 cents higher at US$12.96 3/4, and November soybeans were 7 1/4 cents higher at US$12.36.

 

The firmer overnight theme will provide early support for futures, with carryover buying from Monday's firm close and spillover strength from expected price strength in neighboring wheat futures aiding the gains as well, analysts added.

 

Underlying technical support and lingering concerns surrounding tightening stocks and stout demand continue to bolster upside momentum, with higher crude oil futures and firmer equity markets providing some comfort to market bulls, a CBOT floor trader said.

 

Nevertheless, traders will keep a close eye on outside market influences in the absence of fresh fundamental news, with South American weather and the uncertainty of spring acreage promoting a cautious approach to keep prices within a recent trading range, analysts added.

 

A technical analyst said market bulls have regained some fresh upside near-term technical momentum recently. However, a bearish pennant pattern has just formed on the daily bar chart. The next downside price objective for March soybeans is pushing prices below solid technical support at US$12.20.

 

First resistance for March soybeans is seen at US$12.60 and then at US$12.70. First support is seen at US$12.40 and then at Monday's low of US$12.28.

 

The DTN Meteorlogix Weather Service said scattered showers and cooler temperatures during the past week or so have helped ease stress to crops in Argentina. However, more rain will still be needed to help improve prospects.

 

In Brazil, there's a chance for significant shower activity in Rio Grande do Sul during the next few days, Meteorlogix said. No significant hot weather is in sight, but there is the possibility of some concern about the wet weather in the north.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Tuesday, with most agricultural products trying to recover losses from earlier this month. The benchmark September 2008 soybean contract settled RMB43 higher at 4,667 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange were higher Tuesday as buying interest resumed following a recovery in equities, soyoil and crude oil, said trade participants. The benchmark April contract on Bursa Malaysia Derivatives ended up MYR50 at MYR3,200/tonne but down from an intraday high of MYR3,230/tonne in morning trade.