March 7, 2007

 

CBOT Soy Outlook on Wednesday: 1-2 cents down on e-CBOT, lack of fresh news

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session lower under pressure from modest losses overnight and a lack of fresh supportive news, floor traders said.

 

May soybeans are called to open 1 to 2 cents lower per bushel.

 

In e-CBOT overnight trading, May soybeans slipped 1 1/4 cents to US$7.46 1/2.

 

Some light follow-through selling is expected, and early weakness in the neighboring CBOT corn market also would be negative for soybeans, a CBOT floor analyst said. The market, however, looks due for a bounce after recent declines, he added.

 

May soybean prices Tuesday closed in negative territory for the fourth consecutive day session. Some chart damage has occurred recently, but the technical damage isn't serious, a market technician said.

 

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

 

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 market technician said. The next downside price objective for the bears is closing prices below solid support at this week's low of US$7.39 1/2.

 

First resistance is seen at Tuesday's high of US$7.53 1/2 and then at US$7.60. First support is seen at US$7.45 and then at this week's low of US$7.39 1/2.

 

Fund selling has pressured the market recently and could do so again Wednesday, a floor trader noted. Heavy long liquidation, however, appears to be tapering off, he said.

 

Some position squaring is expected ahead of Friday's release of the U.S. Department of Agriculture's March supply and demand report, which will include a new estimate for U.S. soybean ending stocks and could adjust estimates for global soybean production.

 

A Dow Jones Newswires survey of 15 analysts showed the average estimate for U.S. ending stocks is 589 million bushels, down slightly from the USDA's February estimate of 595 million bushels. A strong export and crush pace may prompt the USDA to lower the carryout, analysts said.

 

Several analysts also predicted the USDA would increase its production estimates for South America.

 

News about mostly favorable crop weather in soybean growing areas of South America is bearish, traders said.

 

DTN Meteorlogix reported rain and thunderstorms in Argentina during the next few days will maintain soil moisture for late filling crops, especially second crop soybeans.

 

In Brazil, there are no significant concerns for the mature crops and harvests in the north and central areas, Meteorlogix said. Thunderstorms will likely return to Rio Grande Do Sul by the weekend, maintaining soil moisture for the pod filling crop, the weather firm noted.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled mixed Wednesday after the overnight decline on the CBOT.

 

A recent snowstorm in northeast China's grain growing regions has given some support to soybean prices because of transport problems, traders said. There are forecasts for possible snowfall in the next 10 days, which may give futures and cash prices an additional boost, they added.

 

The China National Grain and Oils Information Center cut its 2007 soybean acreage forecast by 100,000 hectares based one expectations that farmers will switch to corn to take advantage of the grain's high prices.

 

Crude palm oil futures on the Bursa Malaysia Derivatives, meanwhile, ended mostly lower Wednesday after yet another lackluster trading day. Participants continued to bide their time until the release of a slew of data and the start of a key industry gathering March 12.

 

In other news, deliveries posted against the CBOT March soybean future were 895 contracts. A total of 180 notices were placed against the CBOT March soymeal future.