February 20, 2008

 

CBOT Soy Outlook on Wednesday: Mixed, consolidate after run to new highs

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session mixed, with old crop futures consolidating after recent gains and new crop contracts rising on acreage needs, analysts said.

 

CBOT old crop soybean futures are called to start the session 4 to 6 cents lower, while the new crop November future is called to open 1 to 2 cents higher.

 

In overnight e-CBOT trading, March soybeans were 3 1/4 cents lower at US$13.95 1/4, May soybeans were 4 3/4 cents lower at US$14.13, July soybeans were 6 1/4 cents lower at US$14.23 3/4, and November soybeans were 1 1/2 cents higher at US$13.62.

 

Old crop soybeans are poised for a lower start, pulling back on profit taking pressure amid a lack of fresh news to buoy prices at historic highs, analysts said. The market is a little overdone after rallying on Chinese demand and outside market support in the past couple of sessions, analysts added.

 

Spillover pressure from consolidating outside markets will aide the lower theme, with a firmer U.S. dollar taking some of the edge off prices as well, traders said. Crude oil and metal futures are lower and the U.S. dollar index is higher in early trading.

 

However, new crop futures are expected to hold firm amid the need to buy acres, and ideas Thursday's U.S. Department of Agriculture Outlook Forum will highlight the need for more U.S. soybean acreage in 2008, traders added.

 

Losses in nearby contracts are seen limited also, as traders remain cautious of selling into the market as futures remain in a bullish uptrend with supportive longer range fundamental outlooks, a CBOT broker said.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above solid resistance at US$14.50 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$14.00.

 

First resistance for July soybeans is seen at Tuesday's contract high of US$14.39 and then at US$14.50. First support is seen at Tuesday's low of US$14.14 1/2 and then at US$14.00.

 

The DTN Meteorlogix Weather Service said Brazil's recent weather pattern has been more favorable for the harvest in the north and for filling soybeans in the south. However, the harvest may slow, at times, due to increasing shower activity in central and north areas. In Argentina, periodic thundershower activity and only brief hot spells likely means mostly favorable conditions for filling crops.

 

In other news, Chinese soybean importers booked an average of seven to nine cargoes in the past two weeks through the Lunar New Year holiday, an analyst at commodities analysis firm Shanghai JCI said Wednesday.

 

Meanwhile, another analyst at Shanghai JCI, estimated that China imported 250,000-300,000 tonnes of soyoil in January compared with 189,206 tonnes during the same period last year.

 

Philippine feedmillers are seeking a one-year suspension of import tariffs on soybeans and soybean meal in an environment of rising international commodity prices, an association executive said on condition of anonymity Wednesday. The request, if granted, would ease the surging cost of imported raw material for feedmilling, he said.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday on profit-taking after recent strong gains. The benchmark September 2008 soybean contract settled RMB15 lower at RMB5,009 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange extended their streak for setting new record highs to five successive trading days Wednesday but ended little changed, despite cargo surveyors reporting a major rise in shipments to the European Union. The benchmark May contract on the Bursa Malaysia Derivatives ended MYR1 lower at MYR3,624/tonne, but not before reaching a new all-time intraday high of MYR3,657.