April 2, 2008

  

CBOT Soy Outlook on Wednesday: Seen down on bearish crop ideas, setback

 

 

Chicago Board of Trade soybean futures are expected to start Wednesday's day session weaker in a setback from gains Tuesday and amid bearish concerns about increased acreage, traders said.

 

Soybean futures are called to open 5 to 10 cents per bushel lower. In overnight electronic trading, May soybeans slipped 3 1/2 cents to US$12.07 1/2.

 

There are ideas the market is in an overbought condition after a bounce Tuesday, a CBOT floor analyst said. Expectations for a big increase in U.S. soybean acres also are bearish, he said.

 

Wet weather in the U.S. Midwest is delaying field work for corn and leading to ideas that producers may switch more land to soybeans, analysts said. The wet weather pattern looks to continue over the eastern and southern Midwest, increasing concerns about delays, DTN Meteorlogix said.

 

The U.S. Department of Agriculture's prospective plantings report, issued Monday, also predicted that growers would seed more soybeans this year than expected. That was bearish for the markets.

 

Increased margins may add some pressure to prices, a trader said. Minimum margins for CBOT soybean, mini-soybean and soyoil futures were increased at the close of business Tuesday. Initial margins for soybean futures were raised to US$5,400 from US$4,388.

 

"The long-only funds have to pay up," an analyst said, "or they have to get out."

 

However, soybeans could trade both sides as a farmers' strike in Argentina remains bullish, an analyst said. The strike is preventing agricultural commodities from getting to port and raising ideas that more soy export business will shift to the U.S. from South America.

 

The next upside price objective for the soybean bulls is to push the July contract above solid technical resistance at US$12.74, which would fill on the upside Monday's big downside price gap on the daily bar chart, a technical analyst said. The next downside price objective for the bears is pushing and closing prices below psychological support at US$12.00.

 

First resistance for July soybeans is seen at Tuesday's high of US$12.44 and then at US$12.50. First support is seen at US$12.15 and then at US$12.00.

 

In China, soybean futures traded on the Dalian Commodity Exchange settled mostly higher Wednesday on Tuesday's strength at the CBOT. The market will monitor CBOT trends closely, an analyst said.

 

The USDA on Wednesday reported private export sales of 226,000 metric tonnes of Soybeans for delivery to China during the 2007-2008 marketing year. The 2007-2008 marketing year for soybeans began Sept. 1.

 

Benchmark crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday on liquidation pressure. The benchmark June contract on Bursa Malaysia Derivatives ended MYR9 lower at MYR3,170 a metric tonne after trading up to MYR120 higher during the day.