March 3, 2010

 

CBOT Soy Outlook on Wednesday: Seen higher, weak dollar lends support

 

 

Soybean futures on the Chicago Board of Trade are poised for a firmer start to Wednesday's day session, taking its lead from the overnight theme, with weakness in the U.S. dollar supporting prices.

 

CBOT soybeans are seen opening 3 cents to 5 cents higher.

 

Overnight, CBOT March soybeans ended 1/2 cent higher at US$9.54 3/4 a bushel, and May soybeans were 5 1/4 cents higher at US$9.68 3/4.

 

The weaker U.S. dollar is the driving force behind the market's price strength, with a quiet newsfront not providing any new fundamental features for traders to focus on, said Don Roose, president of U.S. Commodities in West Des Moines, Iowa.

 

A lower U.S. dollar makes U.S. exports more attractive to world importers.

 

Lingering concerns about wet conditions in northern Brazil potentially producing yield losses is providing underlying support for prices, he said.

 

Otherwise, traders anticipate a choppy trading session, with futures settling into a consolidation theme heading toward next week's U.S. Department of Agriculture supply and demand reports.

 

Meanwhile, soyoil is expected to gain strength from optimistic outlooks for the biodiesel industry, with a US$1-a-gallon tax credit for biodiesel blending expected to be tied into congressional legislation soon.

 

Commercial deliveries against the CBOT March soymeal contract are seen limiting price gains in soymeal futures.

 

March soymeal deliveries totaled 300 lots. The house account at Bunge Chicago issued the lots, while a customer account at J.P. Morgan stopped 174 lots. The last trade date assigned was February 16.

 

A technical analyst said the next downside price objective for May soybeans is pushing and closing prices below solid technical support at US$9.41. The next upside technical objective is pushing and closing May prices above solid technical resistance at last week's high of US$9.85.

 

In overseas markets, soybean futures rose on the Dalian Commodity Exchange on Wednesday due to concerns that weather conditions in South America could impact crops. The September soybean contract settled 0.3% higher at RMB3,894 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange rose as much as 1.0% on Wednesday, erasing previous losses as investors covered their shorts on tight palm oil supply in Malaysia, trade participants and analysts said. The May CPO contract on the Bursa Malaysia Derivatives ended MYR23 or 0.9% higher at MYR2,635 a metric tonne.

 

Rotterdam soybean prices and soymeal prices were mixed. European vegoil prices were mixed.