February 13, 2008

 

CBOT Soy Outlook on Wednesday: Down 2-5 cents, carryover sales, wheat spillover

 

 

Soybean futures on the Chicago Board of Trade are expected to start Wednesday's day session on the defensive on carryover weakness from Tuesday and spillover pressure from wheat.

 

CBOT soybean futures are called to start the session 2 to 5 cents lower.

 

In overnight e-CBOT trading, March soybeans were 4 cents lower at US$13.18, July soybeans were 4 1/2 cents lower at US$13.44 3/4, and November soybeans were 6 cents lower at US$12.63 1/2.

 

A quiet news front, with an absence of fresh supportive news to feed market bulls is seen attracting speculative sales, analysts said.

 

Technically, the market is overbought and without any new bullish stimulus to inspire bulls, futures are expected to follow wheat lower, with declines in outside markets applying pressure as well, a CBOT floor analyst said.

 

Meanwhile, downside risks remain limited as the market remains fundamentally underpinned by tightening supplies, uncertainties surrounding South American production and solid underlying global demand, traders added.

 

A technical analyst said soybean bulls are fading, technically. The next upside price objective for the bulls is to push and close prices above solid resistance at US$13.75 a bushel. The next downside price objective for July soybeans is pushing and closing prices below solid technical support at US$13.30. First resistance for July soybeans is seen at this week's high of US$13.63 and then at US$13.75. First support is seen at US$13.44 and then at Tuesday's low of US$13.34.

 

The DTN Meteorlogix Weather Service said it will be drier during the next 5-6 days but not hot in Southern Brazil. It looks to start raining again next week, Meteorlogix said. The harvest areas of northern Brazil should have showers and harvest slow downs but the rain does not look to be very heavy.

 

In Argentina, crops will probably benefit from warmer weather during the balance of this week. The next chance for rain appears to be from later this weekend into early next week, Meteorlogix said.

 

In other news, Brazil's farm consulting firm AgRural said the new soy crop is behind schedule because of rains in Mato Grosso. Just 3% of the crop is harvested on a national level compared to around 7% last year.

 

Meanwhile, Brazil should crush 31.5 million metric tonnes of soybeans in marketing year 2008-09 out of a new soy crop estimate of 60.5 million, the Brazilian Vegetable Oils Industry Association, or Abiove, said Wednesday.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled slightly down Wednesday on expectations of shrinking demand after the Lunar New Year holiday. The benchmark September 2008 soybean contract slipped RMB25 to settle at RMB4,806 a metric tonne, after trading between RMB4,789/tonne and RMB4,830/tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday after end-January palm oil stocks were estimated at an all-time high, trade participants said. The benchmark April contract on the Bursa Malaysia Derivatives ended MYR15 lower at MYR3,360 a metric tonne after reaching an intraday low of MYR3,338.