May 7, 2008

 

CBOT Soy Outlook on Wednesday: Up 3-5 cents, cautious action, uncertainties

 

 

Soybean futures at the Chicago Board of Trade are poised for a slightly firmer start, following the lead of higher overnight prices, as traders tread cautiously amid various market uncertainties, analysts said.

 

CBOT soybean futures are called to start the session 3 to 5 cents higher.

 

In overnight electronic trading, July soybeans were 3 1/2 cents higher at US$12.80 1/2, November soybeans were 1 cent higher at US$12.18 1/2. July soyoil was 24 points lower at 57.60 cents per pound and July soymeal was US$0.10 lower at US$327.70 per short ton.

 

The uncertainties of the Argentine strike situation coupled with acreage concerns amid mixed weather patterns have the market poised for another volatile trading session, said Jason Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

 

A mixed tone in outside inflationary markets with a choppy tone in crude oil futures, lower precious metal futures and a firmer U.S. dollar are not providing clear guidance for the market either, traders said.

 

The market will see some volatility, with traders keeping a close eye on developments from morning talks between Argentina farm groups and the government, traders added. Technical activity will play a key role in the absence of fresh fundamental news, a floor broker said.

 

A technical analyst said market bears are gaining downside technical momentum. The next downside price objective for July soybeans is pushing and closing prices below solid technical support at last week's low of US$12.44. The next upside price objective is to push and close prices above solid technical resistance at US$13.50 a bushel.

 

First support for July soybeans is seen at Tuesday's low of US$12.75 and then at US$12.65. First resistance is seen at 13.00 and then at US$13.12.

 

Meanwhile, key talks aimed at avoiding a repeat of a crippling Argentine farmers strike in March ended without agreement Tuesday, but farm leaders said the government was considering modifications to a controversial export tax on grains.

 

Farm groups plan to meet Wednesday following the morning talks with the government, and will hold a press conference at 5:00 P.M. local time to announce the results.

 

Looking ahead, U.S. Department of Agriculture will release its monthly supply and demand report Friday at 8:30 a.m. EDT, revealing its first official projections for the 2008-09 soybean balance sheet. The average of analysts estimates peg 2007-08 soybean ending stocks at 152 million bushels, and the 2008-09 carryout at 273 million.

 

In overseas markets, China's soybean futures traded on the Dalian Commodity Exchange settled slightly higher Wednesday on limited domestic soybeans available for delivery. The benchmark January 2009 soybean contract settled RMB19, or 0.46%, higher at RMB4,164 a metric tonne.

 

Crude palm oil futures on Malaysia's derivatives exchange ended lower Wednesday, erasing early gains in lackluster choppy trade amid a weak demand in the cash market, said trade participants. The benchmark July contract on the Bursa Malaysia Derivatives ended within a small range for the sixth successive trading day, between MYR3,340/tonne and MYR3,395/tonne.