April 22, 2009

 

CBOT Soy Outlook on Wednesday: Fundamentals keep market underpinned

 

 

Bullish underlying fundamentals are expected to push Chicago Board of Trade soybean futures prices higher to start Wednesday's day session.

 

CBOT soybean futures are called to open 3 cents to 5 cents higher.

 

Old crop soybean futures remain in a strong up trending market, with support from exports -particularly from China and disappointing Argentina soy crop yields serving as the fundamental driver of prices, said Dax Wedemeyer, analyst with U.S. Commodities in West Des Moines, Iowa.

 

New crop futures are seen firmer as well, benefiting from the uncertainty of 2009 acres. The soybean market needs to keep a favorable price ratio with corn to secure enough acres to alleviate tight projected carryover supplies.

 

The tug-of-war between wet and dry Midwest areas raises concerns about how many corn acres will be planted or possibly shifted to soybeans on seeding delays, Wedemeyer said. Old/new crop spreading may remain active on these uncertainties.

 

Meanwhile, a lack of any decisive movement in outside financial markets is allowing technicals to be recharged, Wedemeyer added.

 

A technical analyst said market bulls rebounded quickly Tuesday to reaffirm the seven-week-old uptrend in place on the daily bar chart.

 

The next upside price objective for July soybeans is to push and close prices above solid technical resistance at last week's high of US$10.64 1/2 a bushel. The next downside price objective is pushing and closing prices below psychological support at US$10.00 a bushel.

 

CBOT soy product futures are seen mixed, in line with overnight price action.

 

India is on a buying spree, shopping soyoil not only from traditional supplier Argentina but also from the U.S. It has purchased up to 180,000 metric tonnes so far this month for April-May shipment, trading executives said Tuesday.

 

In overseas markets, soybean futures traded on China's Dalian Commodity Exchange settled higher Wednesday, following the recovery in financial and commodities markets Tuesday. Crude palm oil futures on Malaysia's derivatives exchange rose Wednesday on renewed concerns about tight stocks, said trade participants.