April 5, 2006

 

CBOT Soy Outlook on Wednesday: Flat-up 1 cent; in tune with e-CBOT

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's open outcry session firmer, in step with overnight trade as the market attempts to stabilize following recent setbacks.

 

Analysts expect soybeans to open steady to 1 cent per bushel higher.

 

In overnight electronic trade, May soybeans were 1 1/4 cent higher at $5.60, May soymeal was $0.40 higher at $171.40 and May soyoil was 2 points lower at 22.42 cents per pound.

 

Analysts say the market is overdue for a modest bounce after satisfying near-term downside objectives, as prices adjusted to bearish fundamental influences.

 

However, without any supportive features to attract fresh buying interest, traders say it will be tough to sustain advances unless demand increases or speculative funds return as buyers in the market.

 

Higher price action in outside inflationary markets are seen providing mild support, but with technical weakness adding to downside pressures, traders will remain hesitant to aggressive buying into the market, said a CBOT commission house broker.

 

Market technicians said serious near-term chart damage has been inflicted the past three trading sessions, to suggest that prices can continue on a near-term path lower. The next downside price objective would be below solid support at the $5.50 level. It will take a close above chart resistance at last week's high of $5.89 to provide fresh upside technical momentum.

 

First resistance for May soybeans is seen at $5.64 1/2 - Tuesday's high - and then at $5.72. First support is seen at $5.57 1/2 - Tuesday's low - and then at $5.50.

 

U.S. Midwest cash soybean basis bids mostly unchanged Wednesday, cash dealers said.

 

DTN Meteorlogix Weather Service forecast calls for a period of heavy thunderstorms during the next 3-5 days, especially for Parana and Mato Grosso Do Sul but possible elsewhere in the region. This activity may slow harvest activities. Some scattered thundershower activity may lead to a few harvest delays but nothing major is expected in Argentina, Meteorlogix said.

 

Rotterdam soybeans were lower and soymeal prices were flat to lower, and European vegoils were lower.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled lower Wednesday, with most contracts stumbling again to the lowest points since early December, on fundamental and technical weakness, traders said. The benchmark September 2006 soybean contract settled RMB13 lower at RMB2,622 a metric tonne, after touching lowest point since early December at RMB2,611/tonne.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday, with the benchmark contract falling to its lowest level so far in 2006, as the market continued to succumb to the pressures of rising stocks and a strengthening ringgit. The benchmark June CPO contract ended at MYR1,411 a metric tonne, down MYR16 from Tuesday after moving between MYR1,408 and MYR1,426.