April 19, 2006

 

CBOT Soy Outlook on Wednesday: Down 1-2 cents, setting back from tuesday's gains

 

 

Chicago Board of Trade soybean futures are pegged to start Wednesday's session lower, settling back after Tuesday's speculative buying push, traders say.

 

Analysts expect soybeans to open 1 to 2 cents per bushel lower.

 

In overnight electronic trade, May soybeans were 2 cents lower at US$5.73 1/2, July soybeans were 2 1/4 cents lower at US$5.87 1/2, July soymeal was US$0.10 lower at US$178.20 and July soyoil was unchanged at 23.71 cents per pound.

 

The market is poised to settle back to a more realistic type of trade after Tuesday's great deal of speculative buying related to increased interest in biodiesel fuel amid record crude oil prices, said Don Roose, president U.S. Commodities in West Des Moines, IA.

 

However, traders will keep an eye on outside markets for possible signs of increased speculative buying potential, with metals continuing to set multi-decade highs. Nonetheless, traders say from a fundamental standpoint, traders have little incentives to aggressively push prices higher, as the upward price moves make it debatable as to how many acres can be diverted from soybeans, particularly in a market facing bearish supply side features.

 

In early Wednesday trade, crude oil futures are lower setting up for a pull back, but with technical considerations a key factor in the market, traders will keep a close eye out for any signs of downside selling exhaustion, said a CBOT commission house broker.

 

Technical analysts say the market has scored fresh upside technical momentum, but it will take a close above major psychological resistance at US$6.00 to provide better upside technical power. A close below the April low of US$5.68 1/4 would provide the solid downside technical momentum.

 

First resistance for July soybeans is seen at US$5.91 1/2 - Tuesday's high - and then at US$5.95. First support is seen at US$5.84 1/2 - Tuesday's low - and then at US$5.81 1/2 - this week's low.

 

In soyoil, fresh upside technical momentum was achieved Tuesday, with the next upside technical objective closing prices above resistance at the January high of 24.33 cents basis the July future, analysts said.

 

First resistance for July is seen at 23.78 cents - Tuesday's high - and then at 24.00 cents. First support is seen at 23.40 cents and then at 23.15 cents - Tuesday's low.

 

U.S. Midwest cash soybean basis bids are unchanged to higher Wednesday, cash dealers said. Spot cash soybean bids were up 2 cents in central Illinois, up 4 cents in Cedar Rapids, IA, and up 4 cents in St. Louis, Mo., according to cash sources Wednesday.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said less rainfall during a five-day period is improving conditions for the soybean harvest across Brazil. In Argentina, mostly light showers Wednesday will cause only minor harvest delays, Meteorlogix added.

 

Rotterdam soybeans were higher and soymeal prices were lower, and European vegoils were mixed.

 

In overseas markets, soybean futures on China's Dalian Commodity Exchange settled slightly higher, as soybean futures on the Chicago Board of Trade extended to new two-week highs Tuesday, analysts said. The benchmark September 2006 soybean contract settled RMB6 higher at RMB2,606 a metric tonne, after trading in a narrow range.

 

Crude palm oil futures on the Bursa Malaysia Derivatives ended slightly higher Wednesday, tracking gains in soyoil amid renewed optimism about biodiesel after crude oil prices touched record highs. The benchmark July CPO ended at MYR1,471 a metric tonne, up MYR3 from Tuesday after moving between MYR1,468 and MYR1,476/tonne.