April 4, 2007

 

CBOT Soy Outlook on Wednesday: Up 5-7 cents; following overnight price trends

 

 

Chicago Board of Trade soybean futures are seen beginning Wednesday's day session on firm footing, taking its cue from overnight trade, with spillover from corn and technical strength underpinning prices.

 

In e-CBOT trade, May was 6 3/4 cents higher at US$7.70 1/2 and November soybeans were 6 cents higher at US$8.13 1/4.

 

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

 

The market is poised for a higher start, influenced by overnight trends in the absence of fresh fundamental news, analysts said.

 

Underlying technical support, bullish long range demand outlooks and expected price strength in neighboring corn futures are seen promoting higher price action, analysts added.

 

The market is expected to continue its range bound trend, with concerns spring weather uncertainties could lead to additional soy acres applying mild pressure, while talk of soybeans not being able to afford any yield losses in 2007 amid rising global demand an underpinning feature, a CBOT floor analyst said.

 

A technical analyst said soybean bulls would regain technical momentum by producing a close above solid chart resistance at this week's high of US$7.87 basis May futures. The next downside price objective is closing prices below solid support at US$7.50.

 

First resistance for May soybeans is seen at US$7.70 and then at US$7.75. First support is seen at US$7.60 and then at US$7.55.

 

The DTN Meteorlogix Weather Service forecast said mainly dry and very cold conditions are on tap for the western Midwest during the next 5 days. The low temperatures will be in the teens and low 20s Fahrenheit on most days during this period with highs only in the 30s and low 40s F. There readings are 10-20F below normal.

 

In the eastern Midwest, very windy and much colder conditions are forecast for Wednesday and Thursday. The northern part of the region has a chance for snow showers. Mainly dry conditions and not as windy are seen for Friday through Sunday. Temperatures will average well below normal. The lowest temperatures during this period will likely fall to the teens or low 20s F as far south as the Missouri Bootheel and the lower Ohio over valley. These readings would be 15-25F below normal, Meteorlogix reports.

 

In other news, the China National Grain and Oils Information Center, or CNGOIC, has cut its outlook for 2007 soybean acreage and production. Soybean acreage was estimated at 8.6 million hectares, down 3.2% from 2006, and 2007 output was estimated at 15.0 million metric tonnes, down 3.2% from 2006. In its monthly report, the government think-tank said Wednesday that higher corn prices have caused a shift in soybean acreage to corn.

 

In overseas markets, soybean futures traded on the Dalian Commodity Exchange settled lower Wednesday, pressured by Tuesday's losses in CBOT soybean futures. The benchmark September 2007 contract fell RMB11 to settle at RMB3,262 metric tonne, after trading between RMB3,250/tonne and RMB3,272/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Wednesday, with the benchmark contract ignoring weakness in soyoil futures to reach a new eight-year high. The benchmark June contract ended at MYR2,115 a metric tonne, up MYR29 from Tuesday, its highest level since early January 1999.