February 5, 2008

 

CBOT Soy Outlook on Tuesday: Down 7-9 cents on US dollar, wheat underpins

 

 

Soybean futures on the Chicago Board of Trade are poised for a lower opening to day session trading Tuesday, following the overnight theme with strength in the U.S. dollar generating pressure while wheat futures underpin, analysts say.

 

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

 

In overnight e-CBOT trading, March soybeans were 8 3/4 cents lower at US$13.17 1/4, July soybeans were 7 1/2 cents lower at US$13.51, and November soybeans were 6 1/4 cents lower at US$12.88 1/4.

 

The strength in the U.S. dollar will apply early pressure to the market, with weakness in gold, silver and energy futures attracting speculative selling, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

However, the continued rise of U.S. wheat futures, with Minneapolis spring wheat spiking to a new all-time high of US$14.63 overnight will provide support to limit losses and attract buying on price breaks, a CBOT floor analyst said.

 

A lower-than-expected Canadian all wheat stocks projection released by Statistics Canada is seen producing fresh support for wheat as well.

 

"With the battle for spring acres moving into full swing, the market can't afford to let wheat or corn push higher without a similar price response from soybeans," he added.

 

Lingering concerns over harvest slowdowns in northern Brazil coupled with dryness issues in southern Brazil and Argentina is seen as an underpinning feature as well, traders said. Supportive outlooks for tighter ending stocks in Friday's supply and demand report will help limit losses, traders added.

 

Nevertheless, without fresh supportive fundamental news the market will play close attention to the impact of outside markets with prices approaching contract highs again, Roose added.

 

A technical analyst said the next upside price objective for March soybeans is to push and close prices above solid resistance at the contract and all-time high of US$13.41 a bushel. The next downside price objective is pushing prices below solid technical support at US$12.80.

 

First resistance for March soybeans is seen at Monday's high of US$13.27 and then at US$13.41. First support is seen at US$13.00 and then at US$12.85.

 

The DTN Meteorlogix Weather Service said heavy rains continue to raise concerns for maturing soybeans in Brazil's Mato Grosso and Goias states. The southern belt may see increasing shower activity later this week or during the coming weekend.

 

In Argentina, it looks to be fairly hot Tuesday and Wednesday, not as hot Thursday, Meteorlogix said. However, there also appears to be a significant chance for thunderstorms later this week and cooler conditions for the weekend, they added.

 

In other news, small and medium enterprises in Indonesia that produce tofu and soybean cakes, or tempeh, will be able to get a subsidy of IDR1,000 per kilogram on their soybean purchases from mid-February, news web site detik.com said Tuesday. The report quoted Industry Ministry Director General Fauzi Aziz as saying that the enterprises will be able to buy soybeans at the discounted price from soybean traders, who will in turn be reimbursed by the government for the discount from Feb. 14.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled up sharply Tuesday on short-covering, after soybean futures traded on CBOT rallied to three-week highs Monday. The benchmark September 2008 soybean contract rose RMB71 to settle at RMB4,831 a metric tonne, after trading between RMB4,802/tonne and RMB4,856/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended marginally higher Tuesday, after a day of speculative trading that saw the market setting a new all-time intraday high of MYR3,458 a metric tonne, market participants said. The benchmark April contract ended MYR4 higher at the intraday low of MYR3,349/tonne.