March 28, 2007

 

CBOT Soy Outlook on Wednesday: Up 5-7 cents; e-CBOT, outside market strength

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's day session on firm footing, following the lead of overnight trade, amid strength in outside markets.

 

In e-CBOT trade, May was 6 1/4 cents higher at US$7.63 1/4 and November soybeans were 6 1/2 cents higher at US$8.06 1/4.

 

CBOT soybean futures are called to start the session 5 to 7 cents higher.

 

The market is poised for a firm start, finding support from a decent technical close Tuesday and outside market strength from higher crude oil and metals markets amid political tensions in the Middle East, said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

Pre-crop report short covering and end of month and quarter position squaring are seen adding to the supportive early tone, analysts added.

 

Otherwise, futures have little fresh fundamental news to dictate direction aside from speculation surrounding potential 2007 US soybean acres. An aggressive South American harvest does provide a mitigating circumstance to offset some market strength, Roose added.

 

A technical analyst said the next downside price objective for market bears is closing prices below solid support at US$7.50 basis May futures. Soybean bulls would regain some fresh technical momentum by producing a close above solid chart resistance at last week's high of US$7.75, he added.

 

First resistance for May soybeans is seen at Tuesday's high of US$7.61 1/2 and then at this week's high of US$7.64 3/4. First support is seen at this week's low of US$7.52 1/2 and then at US$7.50.

 

U.S. Department of Agriculture is scheduled to release its prospective plantings and quarterly grain stocks reports Friday 7:30 a.m. CDT (1230 GMT). The average estimate of 22 analysts surveyed by Dow Jones Newswires projects 2007 US planting intentions at 69.167 million acres. The estimates ranged from 65.927 million acres to 70.800 million. In a survey of 14 analysts, the average guess for quarterly grain stocks was 1.801 billion bushels from a range of estimates from 1.765 billion to 1.830 billion.

 

In demand news, the Seoul branch of the Korea Feed Association, or KFA, has bought 110,000 metric tonnes of optional-origin soymeal from trading house Cargill at a tender concluded Wednesday, an association official said.

 

The DTN Meteorlogix Weather Service forecast said light rain or drizzle may linger in the northern areas of the western Midwest Wednesday, with showers, thunderstorms and rain redeveloping in the west and spreading east Thursday and Friday. Rain or thunderstorms continue during Saturday, before drier conditions surface Sunday. Rainfall during this period should average 0.75-2.50 inches with very high coverage. Temperatures average above normal.

 

In the eastern Midwest, chances for showers or light rain with locally heavier through northern and eastern areas are on tap for Wednesday. Dry conditions or with only a few light showers are seen for Thursday and Friday. Temperatures average above normal. Scattered showers and thundershowers, 0.30-1.50 inches, are forecast for Saturday.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled slightly higher amid sluggish trading, with traders staying on the sidelines ahead of the USDA's acreage and stocks reports due Friday. The benchmark September 2007 contract settled RMB11 higher at RMB3,202 a metric tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended sharply higher Wednesday, hitting a fresh 2007 high, as the market rode on the strength of other commodities such as crude oil and soyoil. The benchmark June contract ended at MYR2,048 a metric tonne, up MYR45 from Tuesday, and surpassing the previous year-to-date high of MYR2,030/tonne.