March 14, 2007

 

CBOT Soy Outlook on Wednesday: Seen down 3-5 Cents following e-CBOT

 

 

A weaker start is expected Wednesday for soy complex futures at the Chicago Board of Trade, following overnight weakness and losses in outside markets.

 

Most-active May soybean futures are called to open 3-5 cents a bushel lower.

 

In overnight trade on e-CBOT, May soybeans fell 5 1/4 cents to US$7.50 1/4.

 

Losses in the stock market, crude oil, gold and silver are all considered negative, grain analysts said. That could spill over to weigh on soybeans, especially after Tuesday's losses in the oilseed market.

 

A technical analyst said Tuesday's weakness meant May soybeans scored an "outside day" down after the market closed near the session low after hitting a fresh two-week high early on. "It's likely that soybeans won't be able to make fresh headway to the upside without the support of stronger corn futures prices," the analyst said. First resistance for May soybeans is seen at US$7.60 and then at US$7.65. First support is seen at Tuesday's low of US$7.55 and then at US$7.50.

 

Funds were sellers in Tuesday's session and could influence trade again Wednesday, said Brian Hoops of Midwest Market Solutions.

 

"Fund selling will dictate how deeply this correction will be in corn and soybeans as they hold massive net long positions and are looking to liquidate positions as the technical trend turns lower. The longer-term fundamentals remain bullish, however the technical trends are bearish," Hoops said.

 

The National Oilseed Processors Association said Wednesday its February soybean crush rates were 130.779 million bushels, under the trade expectation of 132.6 million bushels. It was also significantly under the January figure of 148.858 million bushels. Analysts expected a smaller crush due to fewer days in February, according to a survey of industry analysts.

 

NOPA said soyoil stocks in February were 2.771 billion pounds, above trade expectations of 2.723 million pounds and up from 2.739 million pounds in January. That could weigh on soyoil and help soymeal-soyoil spreads.

 

There was one delivery posted against the March soybean contract. E.M. Combs & Son Div Of Cunningham issued the delivery and R.J.O'Brien stopped it. Delivery notices against the March soyoil contract totaled 184 contracts. The major issuer was FIMAT, which issued 107 contracts while USA Blue stopped 95.

 

Soybean traders are awaiting any further news regarding the discovery Tuesday of Asian soybean rust in Iowa. The disease was found on soybean residue recovered from a bin of old-crop soybeans produced there last season. Iowa Secretary of Agriculture Bill Northey said Tuesday the finding doesn't necessarily increase the risk of rust damage to Iowa's unplanted crop, which is normally the first- or second-largest soybean harvest of any U.S. state. Although never officially reported in Iowa, the U.S. Department of Agriculture said the air-borne fungus was found in a record 274 counties across 15 states in 2006, with some infections occurring as far north as central Indiana.

 

In overseas news, crude palm oil futures on the Bursa Malaysia Derivatives fell sharply on pressure from weak CBOT soyoil prices, weakness in crude oil and the overall weakness in global equity markets. May closed at MYR1,944 a metric tonne, down MYR33.

 

At a palm oil conference, influential analyst Dorab Mistry said crude palm oil is set to move well above the MYR2,000 metric tonne in 2007 as demand for oilseeds grows. However, higher palm oil prices could pressure biodiesel makers.

 

Soybean futures at the Dalian Commodity Exchange also slid due to losses on the CBOT. September fell RMB21 to settle at RMB3,196 a metric tonne.

 

Rotterdam soybean and soymeal prices were weaker, as were European vegoils prices.