January 31, 2007

 

CBOT Soy Outlook on Wednesday: Up 1-2 cents on e-CBOT; little fresh news out

 

 

Chicago Board of Trade soybean futures are called to start Wednesday's day session modestly firmer in line with overnight gains, floor sources said.

 

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

 

In e-cbot overnight trade, CBOT March soybeans rose 1 cent to US$7.22.

 

There is little news out to direct prices, and trading will likely be "floppy" during the day session, a floor broker said. Position-squaring may be a feature as it is the last trading day of the month, he added.

 

Competition with corn for 2007 acreage also should continue to provide some underlying support, an analyst said. He noted crude oil futures, which on Tuesday rallied and provided spillover support to soybeans, are lower Wednesday.

 

"Without any news out, everybody's looking to the energy prices," the analyst said.

 

Gains in soybeans Tuesday helped bulls regain some upside technical momentum, a technical analyst said.

 

The next upside price objective for the 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 Tuesday's high of US$7.22 and then at US$7.28 1/2. First support is seen at US$7.15 and then at US$7.10.

 

There is little fresh news regarding the South American crop, although traders continue to talk about possible dryness issues developing in Argentina, sources said. South American crops have seen near ideal growing conditions so far, they added.

 

The DTN Meteorlogix weather forecast calls for a drying trend to continue in Argentina during the next seven days with some hot weather possible at times. Some increasing stress to crops is expected, the firm noted.

 

In Brazil, the chance for increasing soybean rust persists, although soil moisture, showers and temperatures mostly favor crops, Meteorlogix said.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly higher Wednesday, supported by the overnight rise on the CBOT.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Wednesday, boosted by strong gains in other related commodities, such as soyoil. Speculative buying in the closing minutes of the day added to the strength of the market.

 

In other news, the U.S. Department of Agriculture on Wednesday is scheduled to unveil the Bush administration's proposals for what it believes the 2007 farm bill should look like. The proposal is not expected to impact trading immediately as it will be the Democratic-led Congress that actually writes the multi-year blueprint for U.S. agricultural policy, floor sources noted.

 

The USDA on Thursday is scheduled to release the weekly export sales report for the period ending Jan. 25.