April 18, 2007

  

CBOT Soy Outlook on Wednesday: Weaker start following overnight Trade

 

 

A weaker start is expected Wednesday for soy complex futures at the Chicago Board of Trade following overnight losses and weakness in overseas markets, analysts said.

 

Most-active July is called to open 3 to 4 cents weaker.

 

In e-cbot trade, July soybeans fell 4 1/4 cents to US$7.37 a bushel.

 

On Tuesday, soybeans saw a fair amount of fund selling and ended near the lows for the session. Those losses continued into the overnight session and follow-through selling is expected in early dealings, analysts said.

 

"Technical trends are lower and funds will normally sell when the trend is lower," said Brian Hoops of Midwest Marketing Solutions.

 

Soybean futures have been in a downtrend since early April. A technical analyst said July soybean prices Tuesday hit a fresh 11-week low and some chart damage has been inflicted in beans.

 

Soybean bulls would regain some upside technical momentum if July prices can close over US$7.60, while the next downside price objective for the bears is a close below US$7.22. First resistance for July soybeans is seen at US$7.45 and then at US$7.51 1/2. First support is seen at US$7.39 3/4 and then at US$7.35.

 

Don Roose, president of U.S. Commodities, said losses in Malaysian palm oil futures this week is also an anchor on the complex.

 

"Palm oil has had two hard days down...after making 8-year highs, and that's affecting us," Roose said.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday as the market succumbed to profit-taking. The July contract ended at MYR2,160 a metric tonne, down MYR43.

 

Roose also said that given the large supplies of old-crop soybeans, a wide basis in the cash market, aggressive marketing of South America's newly harvested soybean crop and bearish technical chart patterns, there's little reason for bulls to cheer.

 

"We are eyeing a gap on the (daily) chart around US$7.04 (for the July contract)," he said.

 

The market will also look to the Midwestern weather forecasts. DTN Meteorlogix said for the western Midwest, soil temperatures will continue to turn warmer during the next seven days, while showers during the weekend may lead to field work and planting delays.

 

For the eastern Midwest, the next significant chance for rain doesn't come until the middle of next week.

 

"Conditions for field work and planting will improve until that time. Early indications suggest a wet event, however this is a long range forecast and subject to some change," the weather firm said.

 

The drying out of soils will allow farmers to seed corn, which is considered only slightly supportive for soybeans near-term.

 

Corn planting is behind schedule in the Midwest and considering the time frame for corn seeding is smaller than for soybeans - and since the demand for corn is greater due to ethanol needs among other uses - farmers will want to plant as much of the grain as possible. The recent rainy weather has weighed on soybean prices as acres not planted with corn will likely revert to soybeans.

 

In other news, Dalian Commodity Exchange soybean futures fell, tracking overnight losses on the CBOT. September settled RMB51 lower at RMB3,064 a metric tonne.

 

Rotterdam soybean, soymeal and European vegoils were all weaker.