March 5, 2008

 

CBOT Soy Outlook on Wednesday: Up 10-15 cents; bounce from Tuesday's losses

 

 

Analysts and traders at the Chicago Board of Trade expect soybean futures to bounce higher Wednesday, recovering from Tuesday's sharp price declines.

 

CBOT soybean futures are called to start the session 10 to 15 cents higher.

 

In overnight electronic trading, March soybeans were 12 3/4 cents higher at US$15.06 3/4, May soybeans were 17 1/4 cents higher at US$15.28, July soybeans were 18 cents higher at US$15.38, and November soybeans were 11 1/2 cents higher at US$14.10 1/4.

 

A technical recovery is seen buoying soybean prices, as speculative money continues to flow into commodities as a hedge against inflation, analysts said.

 

In early trade, crude oil, gold and silver futures are all posting higher prices.

 

Bullish underlying fundamentals remain a drawing card for speculative and commercial buyers and with strong world demand for soybeans and soyoil, downside price movements are seen limited to brief profit taking setbacks, analysts added.

 

Nevertheless, Tuesday's limit down move has raised a caution flag among market bulls, raising awareness that overbought conditions and world economic uncertainties could lead to some sharp price declines, a CBOT floor broker added.

 

A technical analyst said Tuesday's 50-cent limit down drop to US$15.20 in the July future featured no serious chart damage. The next upside price objective for July soybeans is to push and close prices above solid resistance at US$15.67 a bushel, which is the top of a price gap on the daily chart. The next downside price objective is pushing and closing prices below major psychological support at US$15.00.

 

First resistance for July soybeans is seen at US$15.50 and then at US$15.67. First support is seen at Tuesday's low of US$15.20 and then at US$15.00.

 

In other news, China's Vice Commerce Minister Wei Jianguo said China will encourage the imports of agricultural products that are in great need, including soyoil. He made the comments on the sidelines of the ongoing Chinese People's Political Consultative Conference meeting. There have been rumors in the market that China may cut edible oil import tariffs to help curb rising domestic prices.

 

China's Ministry of Finance said Wednesday on its Web site that the 1% soybean import duty will be extended to Sept. 30. China cut the import duty on soybeans since late 2007 to 1% from 3%, hoping to curb rising inflation pressure due to an increase in food prices.

 

In deliveries, March soybean deliveries totaled 1,733 lots. The house account at Term Commodities issued 1,372 lots, with stoppers scattered among various commission houses. The last trade date assigned was March 4.

 

March soymeal deliveries totaled 525 lots. Customer accounts at Man Professional Clearing issued and stopped 322 and 477 lots respectively. The last trade date assigned was March 4.

 

March soyoil deliveries totaled 1,971 lots. Issuers and stoppers were scattered among various commission houses. The last trade date assigned was March 4.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled sharply lower Wednesday as investors took profits amid concern over the government's tightening policies. The benchmark January 2009 soybean contract settled RMB179 lower at RMB4,696 a metric tonne after hitting limit-down during the session.

 

Crude palm oil futures on Malaysia's derivatives exchange ended only slightly lower Wednesday after staging a recovery on expectations of lower palm oil output in February and fresh buying, trade participants said. They said crude oil prices recovering to above US$100/barrel also buoyed price sentiments for vegetable oils. The benchmark May contract on Bursa Malaysia Derivatives ended MYR4 lower at MYR4,095 a metric tonne after falling MYR171 in the first few minutes of trading.