May 3, 2006

 

CBOT Soy Outlook on Wednesday: Up 2-4 cents, e-CBOT, outside market influence

 

 

Soybean futures on the Chicago Board of Trade are seen starting Wednesday's open auction session higher, in tune with the overnight theme, underpinned by the supportive influence of multi-decade highs in outside metals markets.

 

Analysts expect soybeans to open 2 to 4 cents per bushel higher.

 

In overnight electronic trade, July soybeans were 4 3/4 cents higher at US$6.07 3/4, July soymeal was US$1.00 higher at US$178.50 and July soyoil was 20 points higher at 25.93 cents per pound.

 

The market is expected to start firmly, keying off speculative buying associated with strength in inflationary markets, as traders remain leery of getting in the way of speculative short-covering, analysts said.

 

Talk of declining Brazilian production forecasts are expected to provide mild underlying support, with Brazil's National Commodities Supply Corp., or Conab, expected to release its latest crop forecasts Wednesday.

 

However, even with a firmer open, traders say upside potential remains limited, as bearish underlying fundamentals remain a hindrance to prices breaking out of its recent trading range, said a CBOT commission house broker.

 

Market technicians say it will take a close above solid resistance at last Friday's high of US$6.14 to provide fresh upside technical momentum. A close below the upside gap on Friday-meaning below US$5.91 - would provide the bears with fresh downside technical momentum.

 

First resistance for July soybeans is seen at US$6.12 1/2 - Tuesday's high-and then at US$6.14. First support is seen at US$6.00 and then at US$5.98 - the top of the upside price gap.

 

U.S. Midwest cash soybean basis bids are mostly unchanged Wednesday, cash dealers said. Spot cash soybean bids were up 1 cent in Quincy, Ill., and down 1 cent in St. Louis, Mo., according to cash sources Wednesday.

 

Meanwhile, the DTN Meteorlogix Weather Service forecast said the western Midwest will experience scattered thundershowers through southeast Iowa and in northern Missouri during Wednesday. Only a few light showers are expected elsewhere in the region during this time. Mainly dry conditions are expected Thursday and Friday. Temperatures average near to below normal Wednesday, below to well below normal during Thursday and Friday, Meteorlogix said.

 

In the eastern Midwest, scattered to widely scattered thunderstorms are on tap Wednesday and Thursday. Thundershowers may linger along or south of the Ohio River during Friday. Temperatures average above normal Wednesday but it should be cooler during Thursday and Friday, Meteorlogix added.

 

In deliveries, a total of 1,199 delivery notices were posted against the CBOT May soybean contract. The house account at Term Commodities was the principal issuer of 362 lots. The last trade date assigned was May 2. A total of 474 delivery notices were posted against May soyoil. A customer account at RJ O'Brien issued all 474 lots, with the house account at ADM Investor Services stopping 433 lots. The last trade date assigned was April 28.

 

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

 

In overseas markets, crude palm oil futures on the Bursa Malaysia Derivatives ended lower Wednesday amid concerns that a rising ringgit will make Malaysian palm oil less competitive at a time when overall demand hasn't been particularly strong. The benchmark July CPO contract ended at MYR1,458 a metric tonne, down MYR7 from Tuesday, after moving in a relatively narrow range of MYR1,457 and MYR1,469/tonne.