February 13, 2007

 

CBOT Soy Outlook on Tuesday: Flat-1 cents higher on e-CBOT momentum

 

 

Chicago Board of Trade soybean futures are expected to start flat to 1 cent higher Tuesday on modest overnight gains and with a lack of fresh inputs to provide direction, sources said.

 

In e-CBOT trade, March soybeans rose 3/4 cent to US$7.46 per bushel.

 

The gains overnight indicate a 'Turnaround Tuesday' may be in store after soybeans closed lower on Monday, a floor source said. Soybeans also may feel a boost from talk that excessive wetness in Brazil is threatening to increase soybean rust or delay the harvest, he added.

 

The DTN Meteorlogix weather firm reported there are no significant concerns for Brazil's crop at this time, "except for the possibility of more than average soybean rust."

 

Rui Prado, president of the Mato Grosso Soy Growers Association, said Monday that Brazilian towns like Sapezal and Lucos do Rio Verde would lose as much as 10% of the crop due to rain. The northern soy region accounts for roughly 30% of the state's total soy output, Prado said.

 

The crop loss figures were not based on any official agronomist estimate and is an early glimpse provided by members of the Association, Prado said.

 

In Argentina, meanwhile, moderate to heavy thunderstorms appear likely by the end of this week, which should maintain moisture for most crops, according to Meteorlogix.

 

With little other fresh news out, soybeans may again look to the neighboring grains markets and outside markets for direction, a floor broker said. CBOT corn and wheat futures traded higher overnight.

 

In other developments, there is still bullish talk about an expected U.S. acreage shift from soybeans to corn this spring, floor sources said. Traders are eyeing a March 30 U.S. Department of Agriculture plantings report for a projection on the size of the shift, the sources said.

 

And, despite Monday's losses, soybean bulls still have upside technical momentum on their side, a technical analyst added.

 

The next major upside price objective for the bulls is to close March prices above solid psychological resistance at US$8.00. The next downside price objective for the bears is closing prices below solid support at US$7.20.

 

First resistance is seen at Monday's high of US$7.47 and then at US$7.52 1/4, and then at the contract high of US$7.57. First support is seen at US$7.40 and then at last week's low of US$7.35.

 

Looking forward, Goldman Sachs said soybean inventories may begin to decline which will provide an "upside price risk in the medium-term." The extent of the inventory decline and subsequent price rise will depend on how much soybean acreage is cut in the U.S., the firm stated.

 

The USDA plantings report will provide a better idea on the crop outlook, Goldman Sachs said.

 

At noon EST Wednesday, the USDA at will release its 10-year agricultural production forecast. The agency releases a 10-year "baseline" report each year after it is used to help devise the president's budget proposal.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Tuesday.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended moderately lower Tuesday after dull, range-bound trading. Short covering offset pressure from weakness in other related commodities, traders said.

 

Indonesia's PT Astra Agro Lestari (AALI.JK) said in a statement that it sold 3,000 metric tonnes of crude palm oil and super crude palm oil offered in an auction Tuesday. Indonesia's PT Perkebunan Nusantara, meanwhile, sold 1,000 metric tonnes of crude palm oil.