March 21, 2007

 

CBOT Soy Outlook on Wednesday: Up 3-5 cents; carryover momentum from Tuesday

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's day session on firm footing, taking their cue from overnight trade amid follow through buying from Tuesday's firm close.

 

Soybean futures are called to open 3 to 5 cents higher.

 

In e-CBOT trade, May was 4 3/4 cents higher at US$7.69 1/2 and November soybeans were 3 3/4 cents higher at US$8.11 3/4.

 

Once again the market is faced with a quiet news front, leaving traders concentrating on supportive technical influences to direct prices in early trade, analysts said.

 

Near term upside technical momentum is expected to produce early price strength, with carryover buying from Tuesday an underpinning force. Light short covering and outright speculative buying is seen as a feature, as the bullish debate over potential 2007 U.S. soybean acreage continues to keep sellers on the sidelines, analysts added.

 

Otherwise, futures have no new directive influences, but mild concerns over wet Midwest conditions possibly delaying early corn plantings is seen limiting upside potential, traders added.

 

Higher crude oil futures are seen as mildly supportive to soybeans and soyoil futures, traders said.

 

A technical analyst said market bulls are regaining some near-term technical momentum. Better upside technical momentum would be achieved by producing a close above solid chart resistance at last week's high of US$7.70 3/4 basis May futures. The next downside price objective is closing prices below solid support at this month's low of US$7.39 1/2.

 

First resistance for May soybeans is seen at Tuesday's high of US$7.65 1/2 and then at US$7.70 3/4. First support is seen at US$7.60 and then at Tuesday's low of US$7.56 1/2.

 

U.S. Midwest cash soybean basis bids were mostly steady Wednesday, cash traders said. Spot U.S. cash soybean bids were up 3 cents in Cedar Rapids, IA, down 4 cents in Peoria, Ill, and up 2 cents in St. Louis, MO.

 

The DTN Meteorlogix Weather Service forecast said moderate to heavy rainfall is possible throughout the eastern Midwest during the next few days. This should keep early spring field work slow while a more favorable weather pattern is on tap for field work in the Delta.

 

In other news, Brazil's 2006-07 soy crop is 48% harvested as of March 20, agribusiness consultancy AgRural said Tuesday. The number is 11 points higher than the last week's estimate and 11 points higher in comparison to the 2005-06 soy harvest at this time. The No. 1 soy-producing state of Mato Grosso has 86% of its crop harvested, followed by No. 2 producer Parana with 62% harvested at this time. The No. 3 producer state of Rio Grande do Sul is just 4% harvested, having started harvesting last week. Northern Mato Grosso is finishing up the final days of the 2006-07 harvest.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Wednesday, in line with Tuesday's rise in CBOT soybeans. The benchmark September 2007 contract settled RMB17 higher at RMB3,226 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended mixed Wednesday as negative developments, such as the strong ringgit, countered positive factors, like rising soyoil prices. The benchmark June contract ended down MYR2 at MYR1,975 a metric tonne after moving between MYR1,970 and MYR1,987/tonne.