February 3, 2010

 

CBOT Soy Outlook on Wednesday: Steady, firm; looking for carryover support

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session with a steady to firmer undertone, looking to follow through on Tuesday's technical bounce.

 

In overnight trade, March soybeans were 1 cent or 0.11% higher at US$9.26 1/2, and May soybeans were 1/4 cent higher or 0.03% higher at US$9.36 3/4.

 

The market got caught up in general commodity buying Tuesday, but without bullish outside support to rekindle short covering activity, traders will only have cautious optimism for extending the recovery, said Don Roose, president U.S. Commodities.

 

In early market action, the U.S. dollar index is slightly higher, crude oil is lower, down from overnight advances and metal futures are lower.

 

The ability of futures to climb will be influenced by how outside markets move and what impact there movements will have on commodities. Bearish fundamentals, with record crop potential for South America, ample U.S. inventories and sparse, fresh export demand are seen limiting the market's ability to rally on its own.

 

However, market bulls can draw some encouragement if futures can consolidate at current levels and not challenge underlying chart support, a CBOT floor analyst said. That would signal that the market has found some value despite bearish supply outlooks, he added.

 

A market technician said the next downside price objective for March soybeans is pushing and closing prices below major psychological support at US$9.00. The next upside technical objective is pushing and closing March prices above solid technical resistance at US$9.50.

 

The DTN Meteorlogix weather forecast said a period of dry, hot weather is likely during the next 6 days in Brazil. This should begin to diminish soil moisture and increase stress to crops. Showers and cooler conditions early next week should help, but it is uncertain how much rain would occur in southern growing areas, before drier, hotter weather redevelops, Meteorlogix said.

 

In Argentina, episodes of scattered showers and cooler temperatures will continue. This will help crops recover from last week's hot, dry spell, Meteorlogkix said.

 

Meanwhile, private analytical firm Informa Economics will release its latest world crop estimates, with updated U.S. and world balance sheets at 11:30 am EST.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, following a rebound on CBOT Tuesday. The September 2010 soybean contract settled up RMB12, or 0.3%, at RMB3,767 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended up Wednesday as crude oil rebounded and as market sentiment improved on price-supportive supply-demand fundamentals, trade participants said. The April CPO contract on the Bursa Malaysia Derivatives ended MYR46, or 1.9%, higher at MYR2,498 a metric tonne.