February 14, 2007

 

CBOT Soy Outlook on Wednesday: 1-2 cents up on overnight, technical strength

 

 

Modest overnight gains and continued technical strength are expected to propel Chicago Board of Trade soybean futures to a firmer start Wednesday.

 

Soybean futures are called to open 1 to 2 cents per bushel higher.

 

In e-cbot trade, March soybeans rose 3/4 cents to US$7.55 3/4.

 

Soybeans continue to have solid technical support after ending with strong gains Tuesday and setting new contract highs last week, sources noted.

 

"We're in contract highs. I think that's the dominant issue," said Don Roose, president of U.S. Commodities. "Chart patterns are still positive."

 

Soybean bulls have upside technical momentum on their side amid ongoing fund buying interest, a technical analyst added.

 

The next major upside price objective for the bean 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 the contract high of US$7.57 and then at US$7.60. First support is seen at US$7.50 and then at Tuesday's low of US$7.46 1/2.

 

There could be some light pressure on prices from the National Oilseed Processors Association's January soybean crush report, sources said.

 

The report pegged crush at 148.8 million bushels and soyoil stocks at 2.738 billion pounds. The average analyst guess was 149.1 million for the crush and 2.720 billion for the soyoil stocks.

 

"I think it's lightly negative," Roose said about the crush data. "It may give us more of a cautionary tone, maybe enough for a two sided trade."

 

The U.S. Department of Agriculture, meanwhile, is scheduled to release its 10-year agricultural production forecast at noon EST Wednesday. USDA issues the "baseline" report each year after it is used to help devise the president's budget proposal.

 

Traders said they were focusing on government estimates for acres and corn for ethanol.

 

Looking to South America, there remain some bullish worries about the crop in Brazil, analysts said.

 

Wet to very wet weather is increasing concern for harvest delays and quality problems through the Mato Grosso region, according to the DTN Meteorlogix weather firm. The firm reported the pattern of wetness is supposed to remain in the area, while analysts said they were concerned about soybean rust.

 

Soybean rust also has shown up in Argentina, a floor trader added.

 

Meteorlogix said moderate to heavy thunderstorms appear likely during the next few day and should helped maintain "generally favorable" conditions for the developing soybean crop.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Wednesday, tracking overnight gains in CBOT soybean contracts with support from rising soymeal cash prices.

 

Stronger foreign markets, notably crude oil futures, spurred gains in Chinese soybeans, with traders looking to the energy market for direction amid little fresh leads.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Wednesday amid expectations that exports in February would show an improvement over the previous month.

 

Indonesia's PT Perkebunan Nusantara sold 1,500 metric tonnes of crude palm oil offered in a government auction Wednesday, while Indonesia's PT Astra Agro Lestari said it sold 3,250 metric tonnes of crude palm oil and super crude palm oil.

 

In other news, India's edible oil imports in the three months to January are estimated at 932,214 metric tonnes, up from 776,894 tonnes a year earlier, according to new data from the lobby group of local edible oils traders and manufacturers. Imports of edible oils in January are estimated at 312,584 tonnes, up from 229,241 tonnes a year earlier.

 

Traders said the rise in India's imports of edible oils was mainly due to a decline in local output due to a smaller oilseed crop in 2006-07.