January 30, 2007

 

CBOT Soy Outlook on Tuesday: 1-2 cents lower on weaker e-CBOT tone

 

 

Follow-through selling from the overnight and an absence of fresh news are expected to push Chicago Board of Trade soybean futures to a weaker start Tuesday, sources said.

 

Soybean futures are called to open 1 to 2 cents per bushel lower.

 

In e-cbot overnight trade, CBOT March soybeans were down 2 1/4 cents at US$7.07 1/4.

 

Trading is expected to remain subdued during the day session in the absence of new inputs to direct the market, a floor source noted. News is often slow at this time of year as traders look ahead to spring planting, he said.

 

Also, there are few concerns about the South American crop as weather conditions there remain mostly beneficial for soybeans, a trader added.

 

In Brazil, soil moisture, showers and temperatures mostly favor crops, although the chance for increasing soybean rust is still there, DTN Meteorlogix reported.

 

In Argentina, a drying trend should continue during the next seven days with some hot weather possible at times, the weather firm said. Some increasing stress to crops is expected, Meteorlogix added.

 

In the U.S., soybeans and corn are still competing for 2007 acreage, a factor that should remain supportive for soybeans in the near term, an analyst noted. Corn prices have rallied recently on interest in ethanol, and there are ideas that soybean prices need to keep pace to avoid losing too many acres this spring, he said.

 

"Our biggest acres of corn increase come directly out of soybeans," the analyst said.

 

With that in mind, soybeans will likely be a follower of corn in the near term, a technical analyst added. If corn moves higher, it could pull wheat along, sources said.

 

And, despite a weaker close Monday, there has been no serious chart damage for March soybeans, the technical analyst said.

 

"Bulls are still in firm technical control," he said.

 

The next upside price objective for the soybean bulls is to close March prices above solid chart resistance at the contract high of US$7.28 1/2. The next downside price objective for the bears is closing prices below solid support at US$7.00.

 

First resistance for January soybeans is seen at Monday's high of US$7.14 1/2 and then at US$7.20. First support is seen at Monday's low of US$7.05 and then at US$7.00.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday, following the decline on the CBOT, sources said.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately lower Tuesday amid expectations of poor January exports. Trading activity remained sluggish, however, as participants mostly stayed on the sidelines because of an uncertain long-term outlook for edible oils, traders said.