February 27, 2007

 

CBOT Soy Outlook on Tuesday: Down 2-3 cents on overnight, corn weakness

 

 

Follow-through selling from the overnight trading session and spillover weakness from the neighboring corn market are expected to push Chicago Board of Trade soybean futures to a lower start Tuesday, analysts and traders said.

 

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

 

In e-cbot action, May soybeans slid 3 1/4 cents to US$7.91 1/4.

 

Pressure from Monday's bearish technical reversal in CBOT corn and wheat weighed on soybeans overnight and will likely continue to do so at the opening, a CBOT floor broker said. If corn keeps its weaker theme, it will limit any upside attempts by soybeans, he added.

 

End of the month profit-taking also could keep soybeans on the defensive, traders noted. Outside markets are weaker, and there may be some positioning ahead of first notice day, they said.

 

There may, however, be some speculative buying ahead of the U.S. Department of Agriculture's 2007 Outlook Forum on March 1-2, an analyst noted. Market participants do not want to be short going into spring planting as there remains uncertainty over the size of the U.S. crop, he said.

 

Farmers are expected to plant millions more of acres of corn this spring, largely at the expense of soybeans.

 

The next major upside price objective for the soybean bulls is to close May prices above solid resistance at US$8.50, a technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$7.70.

 

First resistance is seen at US$8.00 and then at the contract high of US$8.07 1/2. First support is seen at US$7.92 and then at US$7.87 1/2.

 

Looking at the weather, scattered rains in Argentina will favor soybeans, although the heaviest precipitation may occur north and east of the major crop areas, according to DTN Meteorlogix. Tuesday's short-range forecast is not as wet looking as Monday's, the weather firm noted.

 

In Brazil, scattered rains may return to the northern crop belt during the next few days, causing minor harvest delays, Meteorlogix reported. Hotter, drier weather in the southern belt is not expected to cause much concern after recent rains, the firm said.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mostly lower Tuesday after digesting last week's gains at the CBOT, traders said. Chinese markets were closed last week in celebration of the Lunar New Year holiday.

 

"Now, the gains have been fully digested," a trader said.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Tuesday after a volatile trading day. Positive influences like higher soyoil prices were countered by concerns about weak demand and profit-taking pressure, traders said.

 

Indonesia's crude palm oil producer PT Astra Agro Lestari (AALI.JK), meanwhile, said its 2006 net profit came in slightly lower than a year earlier because of an increase in cost of sales stemming from higher wages and more expensive fertilizer. Astra Agro also said it sold 3,500 metric tonnes of crude palm oil offered at an auction Tuesday.

 

Indonesia's PT Perkebunan Nusantara said it sold 2,000 metric tonnes of crude palm oil offered in a government auction.

 

In other news, Canadian farmers will be able to produce as large a canola crop as possible in 2007-08 season and not feel the bearish effects of large production at the farm gate, an agriculture consultant said Monday. The consultant said a shift to a demand base from a supply base would reflect new energy needs, including for biofuels.