April 15, 2009

 

CBOT Soy Outlook on Wednesday: Up 4-6 cents; fundamentals a bullish driver

 

 

Soybean futures at the Chicago Board of Trade are set to start Wednesday's day session on firm footing, following the overnight theme, as bullish fundamentals remain a driver of prices.

 

CBOT soybean futures are called to open 4 cents to 6 cents higher.

 

"The bullish tone continues to be led by tight old crop carryout estimates, with the inability to throttle back export demand raising fears about shrinking old crop inventories," said Don Roose, president U.S. Commodities in West Des Moines, Iowa.

 

The market is pricing in risk premium, with reports of poor yields in Argentina adding to the supportive outlook, Roose said.

 

New crop futures are seen climbing also, with futures underpinned by concerns any shortfall in 2009 production could led to another tight supply scenario in the next marketing year.

 

Fundamentals are expected to remain the focus of the market in the absence of any decisive moves in outside financial markets. However, traders are on guard for any signs of exhausted buying that could trigger a modest technical correction from recent gains.

 

A technical analyst said prices are in a six-week-old uptrend on the daily bar chart. The next upside price objective for July soybeans is to push and close prices above solid technical resistance at the January high of US$10.76 a bushel. The next downside price objective is pushing and closing prices below solid technical support at last week' s low of US$9.78 1/4 a bushel.

 

The DTN Meteorlogix weather forecast said wet weather over southern and eastern areas of the U.S. Midwest along with cool temperatures continues to limit fieldwork. However, warmer and drier weather will develop during the next few days before rain returns over the weekend. Drier conditions in the western Midwest is on tap for next week, but some unsettled weather may continue in the east along with cool temperatures.

 

Meanwhile, Argentina's soy crop is in poor condition in much of Buenos Aires province, with significant pest problems due to decreased spending on treatments, according to the Agriculture Secretariat. Yields are low and quality poor due to earlier drought and the low agrochemical use this season.

 

Conditions are a little better in Cordoba and Santa Fe province, although recent dry, hot weather is affecting the crop quality.

 

In overseas markets, soybean futures gained slightly on the Dalian Commodity Exchange Wednesday, holding on to confidence over Chinese demand even as CBOT electronic bourse posted small losses in early trade. Crude palm oil futures on Malaysia's derivatives exchange fell Wednesday in volatile trade that saw prices swing between positive and negative territory, said trade participants.