February 21, 2007

 

CBOT Soy Outlook on Wednesday: 2-3 cents down on e-CBOT, overbought condition

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session lower on a lack of fresh news and amid ideas the market is in an overbought condition, sources said.

 

Soybean futures are called to open down 2 to 3 cents per bushel.

 

In e-cbot trading, March soybeans were 3 cents lower at US$7.68. May soybeans were down 2 1/4 cents at US$7.84 3/4, and November soybeans were down 2 1/2 cents at US$8.20.

 

Light follow-through selling is expected from the overnight as some market participants consider CBOT soybeans to be in an overbought condition after recent rallies, floor sources said. May soybean prices Tuesday hit a fresh contract high and closed near the session high.

 

But soybean bulls still have upside technical momentum on their side amid recent fund buying interest, a technical analyst said.

 

Fundamental support also remains from expectations that U.S. producers will plant far fewer soybean acres this spring in a move to take advantage of increasing demand for corn-based ethanol, a CBOT floor broker added. Traders are looking ahead to government acreage estimates set to be released in March, he said.

 

The next major upside price objective for the bulls is to close May prices above solid psychological resistance at US$8.00, the technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$7.50.

 

First resistance for is seen at Tuesday's day session contract high of US$7.87 1/2 and then at US$7.90. First support is seen at Tuesday's low of US$7.78 and then at US$7.75.

 

There is little trading activity seen from China or Brazil due to holidays there, the floor broker said. China's Dalian Commodity Exchange is closed this week in celebration of the Lunar New Year, while Brazilians on Tuesday celebrated Carnival.

 

In Brazil, however, there remain bullish concerns about persistent rainfall, sources said.

 

Wet weather across northern Mato Grosso will disrupt early harvest and impact crop quality, although conditions are generally favorable in other the major growing areas, according to DTN Meteorlogix. Brazil's forecast looks to be drier or at least less active through northern soybean areas during the next five days, the weather firm reported.

 

In Argentina, near to below normal temperatures and some shower activity through central soybean areas will maintain generally favorable conditions for the developing crop, Meteorlogix said.

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday despite positive export data, pressured by weakness in the soyoil market and sluggish demand on the first day of trading after the Lunar New Year holiday.

A Singapore-based trader said there was a lack of underlying demand as many Chinese buyers were still on vacation.

 

In other news, Indonesia's PT Astra Agro Lestari said it sold 500 metric tonnes of crude palm oil offered in an auction Wednesday, despite offering a total of 6,500 tonnes of palm products. Indonesia's PT Perkebunan Nusantara also said it sold 500 metric tonnes of crude palm oil offered at a government auction Wednesday.

 

Elsewhere, Egypt's General Authority for Supply Commodities bought 19,000 metric tonnes of food oil through private intermediary Meditrade for delivery during the first half of April, a Meditrade official said. Meditrade bought 9,000 tonnes of sunflower oil from Cargill at US$653/tonne and 10,000 tonnes of soybean oil from Multilateral France at US$661/tonne, the official said.