February 28, 2007

 

CBOT Soy Outlook on Wednesday: Up 2-4 cents in rebound on overnight Momentum

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session higher on a bounce from firmer overnight trade and amidst recovery in other markets, analysts said.

 

Soybean futures are called to open 2 to 4 cents per bushel higher.

 

In e-cbot trade, May soybeans were up 2 1/2 cents at US$7.81 1/4.

 

May soybean Tuesday finished sharply lower in a corrective setback from recent gains and on steep declines in China's stock market, analysts said. The psychological influence of stability in China's equity markets overnight should help prices rebound Wednesday, they added

 

CBOT corn and wheat futures also moved higher overnight.

 

"No serious chart damage occurred in beans, but the bulls are rattled and will have to show some strength soon," a technical analyst said. Otherwise, "weak-handed bulls may start to liquidate their long positions, which would add to downside pressure."

 

The next major upside price objective for the soybean bulls is to close May prices above solid resistance at the contract high of US$8.07 1/2, the technical analyst said. The next downside price objective for the bears is closing prices below solid support at US$7.60.

 

First resistance is seen at US$7.85 and then at Tuesday's high of US$7.90. First support is seen at Tuesday's low of US$7.73 and then at US$7.70.

 

There is little fresh fundamental news out for soybeans and trading is expected to be choppy and largely technical, with some positioning ahead of the end of the month, traders said.

 

The CBOT said there were 818 deliveries posted against the March soybeans contract, which was in line with floor traders' expectations. Most traders had estimated deliveries would be 500 to 1,000 contracts delivered, although some analysts expected deliveries as large as 3,000 contracts.

 

Large issuers included the customer account of the Astro division of UBS Securities, which issued 529 contracts, and Fortis Clearing Americas, which issued 138 contracts. Large stoppers included Man Financial Inc, which stopped 251 contracts, and Fimat USA, which stopped 163 contracts. The last trade assigned was Feb. 16.

 

Deliveries posted against the CBOT March soyoil and soymeal contracts were higher than expected.

 

Looking at the weather, scattered rains in Argentina during the past 36 hours were heavier than expected over the north-central and northeast growing areas of the country, DTN Meteorlogix reported. Wet conditions likely mean field work delays, the weather firm said.

 

In Brazil, the northern Mato Grosso region may see increasing thunderstorm activity, causing slow downs to the harvest, according to Meteorlogix. Hotter weather in Rio Grande Do Sul will likely end as thunderstorms increase later this week and this weekend, the firm said.

 

Brazil's 2006-07 soy crop is currently 17% harvested as of Feb. 27 compared to 7% harvested two weeks prior, said local agribusiness consultancy group AgRural.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled lower Wednesday, tracking declines at the CBOT. The fall, however, was forecast to be brief, as the area planted to soybean is expected to decline globally this year, traders and analysts said.

 

China's soybean imports in January rose 44% on year to 2.43 million metric tonnes, the General Administration of Customs said Wednesday. China is the world's biggest importer of soybeans and gets most of its supplies from the U.S., Brazil and Argentina.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Wednesday after a choppy, subdued trading day as the market struggled for direction amid contrasting signals. Losses in most stock and commodity markets overnight had a negative influence on market sentiment, traders said.

 

However, downside room was limited amid ideas that the general weakness in global markets may be merely a one-off and not indicative of a trend reversal, traders said.

 

Indonesia's PT Astra Agro Lestari, meanwhile, said in a statement that it sold 3,500 metric tonnes of crude palm oil and super crude palm oil offered in an auction Wednesday. Indonesia's PT Perkebunan Nusantara said it sold 2,500 metric tonnes of crude palm oil.