February 6, 2008

 

CBOT Soy Outlook on Wednesday: Up 10-15 cents; wheat support, overnight theme

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session higher, following the overnight theme, with spillover support from wheat an underpinning feature.

 

CBOT soybean futures are called to start the session 10 to 15 cents higher.

 

In overnight e-CBOT trading, March soybeans were 15 cents higher at US$13.38, July soybeans were 15 1/4 cents higher at US$13.70 1/4, and November soybeans were 7 1/4 cents higher at US$12.97 1/4.

 

Another limit up move in wheat futures will lend support to prices, with technically inspired buying expected to keep futures in a solid up trend, analysts said.

 

The influence of higher metal and energy futures will aid the higher tone, traders said. Lingering weather concerns for South American crops and outlooks for a tighter U.S. soybean balance sheet in Friday's supply/demand report is seen as supportive as well, traders added.

 

Meanwhile, bullish technical momentum is expected to take centerstage on an upward push, with traders anticipating the market will uncover buy stop orders if futures push above contract highs, analysts added.

 

In overnight trade, the most active March future ended 3 1/2 cents below its contract high of US$13.41 1/2. Traders will also pay close attention for signs of upside exhaustion if the market fails to attract follow through buying at the highs, analysts said.

 

A technical analyst said the market still has upside near-term technical momentum. 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 Tuesday's high of US$13.28 and then at US$13.41. First support is seen at Tuesday's low of US$13.10 and then at US$13.00.

 

The DTN Meteorlogix Weather Service said heavy rains continue to raise concerns for maturing soybeans in Brazil's Mato Grosso and Goias states, however it looks to be somewhat drier during the coming days...especially in Mato Grosso. The Rio Grande do Sul region looks to see significant rainfall during this weekend, maintaining favorable prospects, Meteorlogix said.

 

In Argentina, it looks to be fairly hot Wednesday, and not as hot Thursday. There still appears to be a fair to good chance for significant thundershower activity during the end of this week and into the weekend, Meteorlogix said.

 

In overseas markets, crude palm oil futures on Malaysia's derivatives exchange ended higher Wednesday in thin pre-holiday trading that saw some short-covering, while most participants stayed away from taking new positions ahead of the long weekend, traders said. The benchmark April contract on Bursa Malaysia Derivatives ended MYR36 higher at MYR3,385/tonne. BMD will be closed Thursday and Friday for the Lunar New Year holiday.

 

Soybean and corn futures traded on the Dalian Commodity Exchange will be closed Feb. 6-12. The exchange is closed for the Chinese New Year holiday.