March 6, 2007

 

CBOT Soy Outlook on Tuesday: 2-4 cents up on e-CBOT, tapering liquidation

 

 

Chicago Board of Trade soybean futures are expected to start Tuesday's day session higher after firmer overnight trade and amid an exhaustion of heavy long liquidation, analysts said.

 

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

 

In e-CBOT overnight trading, May soybeans rose 3 1/4 cents to US$7.53 3/4.

 

A rebound in Asian markets helped prices advance overnight and should set a positive tone for the start of the day session, a CBOT floor analyst said.

 

Long speculative liquidation that has weighed on prices recently also appears to be coming to an end, the analyst added. That should allow futures prices to bounce a bit, he said.

 

"We've gotten rid of a lot of length recently," he said.

 

Recent declines have done some technical damage to soybeans' technical charts, although the damage is not serious, a technical analyst said. Bulls do not want to see a move below a very strong technical resistance zone located between US$7.10 and US$7.15, he said.

 

The bulls would regain fresh upside technical momentum by filling on the upside last week's downside price gaps on the daily bar chart. That means pushing prices back to US$7.93 1/2, the technical analyst said.

 

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 next downside price objective for the bears is closing prices below solid support at Monday's low of US$7.39 1/2.

 

First resistance is seen at US$7.55 and then at US$7.60. First support is seen at US$7.45 and then at Monday's low of US$7.39 1/2.

 

There is little fresh news out so a recovery from long liquidation could be a feature of the session, traders said. There also may be the beginning of some position squaring ahead of a U.S. Department of Agriculture report due of Friday that will include new estimates for U.S. soybean ending stocks and world production.

 

In Argentina, recent rainfall will favor filling primary and second crop soybeans, the DTN Meteorlogix weather firm reported.

 

In Brazil, there are no significant concerns for the mature crops and harvests in the north. Showers in the far south could still favor pod filling soybeans, Meteorlogix said.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Tuesday after a recent correction. Traders said the domestic stock market has also showed signs of stabilizing, helping to shore up sentiment for agricultural products futures.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Tuesday, aided by a recovery in other global commodities and equity markets.