April 1, 2009

 

CBOT Soy Outlook on Wednesday: Up 3 to 5 cents; following overnight theme

 

 

Soybean futures at the Chicago Board of Trade are seen starting Wednesday's day session firmer, following through on overnight strength, continuing to garner support from Tuesday's bullish planting and stocks reports.

 

CBOT soybean futures are called 3 cents to 5 cents higher.

 

The market has a bullish fundamental base underpinning prices, with tight supplies and the need to secure adequate acreage in 2009 expected to keep a floor beneath prices, a CBOT floor analyst said.

 

Futures are effectively adding some risk premium to prices, with concerns about lower-than-expected Argentina yields and lingering unrest between the Argentine government and farmers helping hold sellers at bay, analysts said.

 

Argentina is the world's third-largest producer of soybeans and the global leader in soyoil and soymeal exports.

 

However, early weakness in stock indexes and crude oil futures are seen applying pressure to limit advances and attract some profit taking on recent gains.

 

With the U.S. Department of Agriculture's prospective plantings report out of the way, spring weather will take on added significance and serve as another price directive moving forward, a CBOT floor broker said.

 

A market technician said soybean bulls gained fresh, upside, near-term technical momentum Tuesday but need to show more power soon to suggest prices can continue to trend higher.

 

On technical charts, first resistance for May soybeans is seen at Tuesday's high of US$9.54 and then at US$9.60. First support is seen at US$9.50 and then at US$9.40.

 

Soy product futures are seen mixed, in tune with the overnight theme.

 

The DTN/Meteorlogix weather forecast said an active weather pattern remains intact for the U.S. Midwest as storms form over the western U.S. before moving into the Midwest during the next 10 days. This means spring fieldwork delays can be expected, DTN/Meteorlogix said.

 

Meanwhile, Argentine farmers and government leaders met again Tuesday, with both sides leaving no indication that any resolution to their long-running conflict is in sight.

 

Farmers held back from calling another strike and instead attacked the government for what they say is its neglect of small farmers in the midst of a drought and financial crisis.

 

Argentina's Agriculture Secretariat withdrew its latest monthly crop report from its Web site and described the data as invalid, in yet another strange event likely to raise questions about the reliability of the government's statistics.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled higher Wednesday, boosted by a favorable U.S. Department of Agriculture report issued Tuesday. Crude palm oil futures on Malaysia's derivatives exchange ended sharply higher Wednesday, rising on fresh support due to tight supplies of both palm oil and soyoil.