February 27, 2008

 

CBOT Soy Outlook on Wednesday: Down 15-20 cents, profit taking from prior highs

 

 

Chicago Board of Trade soybean futures are seen starting Wednesday's day session lower, succumbing to profit taking pressure following another run to new all-time highs Tuesday.

 

CBOT soybean futures are called to start the session 15 to 20 cents lower.

 

In overnight electronic trading, March soybeans were 19 3/4 cents lower at US$14.47, May soybeans were 20 1/4 cents lower at US$14.64, July soybeans were 19 cents lower at US$14.78 1/2, and November soybeans were 23 cents lower at US$14.04.

 

Once again the market is poised for a mild correction from new highs, with weaker overnight prices opening the door for consolidative action to take place, analysts said.

 

However, futures remain in a bullish uptrend, and with firm outside markets and weakness in the U.S. dollar, speculative and commercial buying is expected to limit downside potential, analysts added.

 

Nevertheless, overbought market conditions and limit down wheat futures should apply mild pressure to weigh on futures in early action, traders said.

 

A technical analyst said the next upside price objective for July soybeans is to push and close prices above solid resistance at Tuesday's contract high of US$15.05 a bushel. The next downside price objective is pushing and closing prices below support at US$14.54, which would fill on the downside Monday's big upside price gap on the daily bar chart.

 

First resistance for July soybeans is seen at Tuesday's contract high of US$15.05 and then at US$15.25. First support is seen at US$14.71 and then at Tuesday's low of US$14.62.

 

Meanwhile, despite concerns about the weather, Brazil's 2007-08 soy harvest is expected to reach more than 60 million metric tonnes, analysts and agronomists said Tuesday. "Brazil's soy harvest should reach 60, 61 (million tonnes) or even higher in 2007-08, making Conab's estimate appear lower than ever," said Steve Cachia, a soy market analyst at Cerealpar.

 

The National Commodities Supply Corp, Conab estimated Brazil's 2007-08 soy crop at 58.5 million metric tonnes on Feb. 12.

 

The DTN Meteorlogix weather forecast said it still appears likely that rains will develop through Brazil's Rio Grande do Sul and southern Parana, favoring filling soybeans. The rains in the far north belt will be less today and Thursday, favoring the harvest. However these rains may intensify again during Friday or during the weekend.

 

In Argentina, periodic thundershower activity and only brief hot spells likely means mostly favorable conditions for filling crops, Meteorlogix added.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, supported by strong gains in edible oil contracts. The new benchmark January 2009 soybean contract settled RMB52 higher at RMB4,745 a metric tonne.

 

Crude palm oil futures on Bursa Malaysia Derivatives ended higher Wednesday on bullish price forecasts for palm oil made at an international vegetable oil conference in Kuala Lumpur and strong crude oil futures, trade participants said. The benchmark May contract ended MYR72 up at MYR3,864 per metric tonne.