April 12, 2006
CBOT Soy Outlook on Wednesday: Steady to up; following overnight theme
Soybean futures on the Chicago Board of Trade are seen starting Wednesday's open auction session steady to firmer, in tune with overnight action as the market struggles to find stability amid a lack of supportive features.
Analysts expect soybeans to open flat to 1 cent per bushel higher.
In overnight electronic trade, May soybeans were 1/2 cent higher at $5.63, July soybeans were unchanged at $5.77, May soymeal was $0.40 higher at $171.60 and May soyoil was 1 point higher at 22.97 cents per pound.
Soybeans are a classic eroding market, with bearish underlying fundamentals limiting upside movement, while the uncertainty of the Brazilian crop size and oversold conditions keep the market biding its time until fresh fundamental influences emerge, said John Kleist of Kleist Agricultural Consulting.
Shrinking Brazilian crop estimates, positioning ahead of the extended holiday weekend and talk of commercial length in the market are seen providing underlying support to prices. However, with record U.S. supplies, a record Brazilian crop and record projected new crop acreage, upside potential remains limited.
Trade talk that Tuesday's consolidative bounce satisfied near term objectives with follow through buying expected to be tempered as prices approach overhead technical resistance opens the door for downside pressure to reemerge, traders said.
Technical analysts say market bears still have the near-term technical advantage, and it will take a close above chart resistance at $5.85 basis July to provide some fresh upside technical momentum. A close below the November low of $5.65 would generate more solid downside technical momentum to suggest another leg down in prices.
First resistance for July soybeans is seen at $5.81 1/2 and then at $5.85. First support is seen at $5.72--Tuesday's low--and then at $5.68 1/4--this week's low--and then at $5.65--the November low.
Agribusiness consultancy AgroConsult released the results Tuesday of a crop tour it conducted in March on more than 1,200 soy fields nationwide, concluding that total Brazilian soybean production will be nearly 2 million tonnes less than a pre-tour estimate of 55.3 million tonnes at 53.5 million metric tonnes. U.S. Department of Agriculture estimates Brazil's crop at 57 million tonnes.
U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday, cash dealers said. Spot cash soybean bids were up 1 cent in St Louis, Mo., up 2 cents in Central, Ill, and down 1 cent in Peoria, Ill, according to cash sources Wednesday.
DTN Meteorlogix Weather Service forecast said Brazil's areas will have improved conditions for the harvest through Thursday. Rain is forecasted for Rio Grande Do Sul Friday or Saturday may lead to delays to the harvest. In Argentina, thunderstorms during the next 24-48 hours may cause a few harvest delays, while colder temperatures during the weekend are not expected to be damaging, Meteorlogix said.
Rotterdam soybeans and soymeal prices were higher, and European vegoils were mostly higher.
In overseas markets, most soybean futures on China's Dalian Commodity Exchange settled slightly higher Wednesday, on the heels of Tuesday's gains in Chicago Board of Trade soybean futures, traders said. The benchmark September 2006 soybean contract settled RMB10 higher at RMB2,591 a metric tonne, after trading between RMB2,585/tonne and RMB2,600/tonne.
China's soybean imports rose 0.1% on year in the January to March period to reach 5.41 million metric tonnes, the General Administration of Customs said on its Web site Wednesday. Soybean imports in March totaled 2.6 million tonnes, it said.
Crude palm oil futures on the Bursa Malaysia Derivatives ended higher Wednesday amid short covering, following gains in CBOT soyoil futures. Soyoil's rise gave a further boost to the market, which has already been on a rising trend recently due to surprisingly bullish supply and demand numbers. The benchmark June CPO contract ended at MYR1,460 a metric tonne, up MYR14 from Monday.
